Everything is vague to a degree you do not realize till you have tried to make it precise.
Winning ways may not be in vogue for the market as the global cues and election expectations makes the outlook vague for some time. We expect a marginally positive opening for Indian markets and a choppy day. Most players will prefer to stay cautious due to uncertainty over the outcome of elections. Technically, 3720 is seen as a key resistance for the Nifty while support is expected at around 3600.
One should brace for a sideways trading week without any definite moves on either side due to anxiety about the election results. Some experts are suggesting caution as valuations have run up too fast without a significant change in fundamentals. Though the overall sentiment is upbeat, one should not get complacent as some correction is likely to set in after the stupendous gains of the past couple of months.
Asian markets are flat after opening high.
Dewan Housing Finance, Electrosteel Castings, Mahindra Forgings, Motilal Oswal and Tata Teleservices will announce their results today.
FIIs were net sellers in the cash segment on Friday at Rs1bn while the local institutions too pulled out Rs893.9mn. In the F&O segment, the foreign funds were net sellers at Rs1.53bn. On Thursday, the foreign funds were net buyers at Rs3.95bn in the cash segment.
US stocks jumped on Friday after a better-than-expected jobs report and the result of the much-awaited stress tests reinforced a growing view that the worst for the economy and the financial sector may be over.
The Dow Jones Industrial Average gained 165 points, or 2%, to 8,574.65, ending at the highest point since Jan. 9. The S&P 500 index rose 22 points or 2.4%, to 929.23, ending at the highest point since Jan. 6. The Nasdaq Composite index advanced 23 points, or 1.3%, to 1,739.00.
All the three major indices ended higher for the week as well. The Nasdaq has now ended higher for nine consecutive weeks. The Dow and S&P 500 have risen for eight of the last nine weeks. The S&P has surged 36% since hitting a more than 12-year low on March 9.
This was the biggest weekly advance for the Dow since the week ended March 27. The S&P 500 finished within a hair's breadth of its highest mark of the year. The S&P 500 is now up 2.9% for the year, and is within 6 points of the closing peak of 935.
US companies cut 539,000 jobs in April, the Labor Department reported, surprising economists who were anticipating job cuts of around 600,000. Employers cut a revised 699,000 jobs from their payrolls in March.
It was the smallest number of job cuts since last October, when the US economy lost 380,000 jobs. However, it brings the total numbers of jobs lost to 5.7mn since January 2008. The US recession is thought to have started in December 2007.
The unemployment rate, generated by a separate survey, rose to 8.9%, as expected, from 8.5% in March, the worst reading since September 1983.
Although the jobs report was not positive markets took heart from the slow pace of decline in non-farm payrolls vis-a-vis previous months. However, the report was helped partly by short-term factors such as a big increase in government jobs added to conduct the 2010 census.
The overall employment picture is still bad. So, one has to wait for the May report now to ascertain the conditions in the labour market.
In the day's other economic news, wholesale inventories shrank for the seventh consecutive month in March, falling to US$411.7bn, the lowest level in 16 months.
The government released the results of the stress tests late on Thursday, saying that 10 of the 19 banks tested will need to raise almost US$75bn in anticipation of a deeper recession. Leading the list was Bank of America, which needs to raise nearly US$34bn. Wells Fargo needs US$13.7bn and Citigroup needs US$5bn.
JPMorgan Chase, American Express and Goldman Sachs were among the banks that won't need to raise any additional money. Financial stocks rallied as investors breathed a sigh of relief that the results weren't worse. The KBW Bank sector index added 12.1%.
Fannie Mae reported a loss of US$23.2bn in the first quarter, or US$4.09 per share, worse than a year ago. The mortgage finance company also said that it needs an additional US$19bn from the government.
After the close on Thursday, AIG reported a quarterly loss of 97 cents per share versus a loss of US$1.41 a year ago. Analysts had forecast a loss of 6 cents per share. Shares of the insurance major inched higher on Friday.
Warren Buffett's Berkshire Hathaway reported a steep drop in first-quarter profit that beat forecasts on a per-share basis.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.28% from 3.32% on Thursday.
The cost of borrowing dollars among banks in London capped its biggest weekly drop since March as US government's stress tests showed that American financial institutions may be able to withstand the economic slump.
The three-month Libor rate fell two basis points to an all-time low of 0.94% from 0.96% on Thursday, according to the British Bankers’ Association. The overnight Libor rate fell to 0.23% from 0.24%. Libor is a worldwide benchmark for bank lending.
Friday's fall in Libor brought its decline in the week to seven basis points, the most since the five days through March 20. Libor fell to below 1% this week as reports on employment and home sales added to evidence the worst of the recession is over.
Result of the stress tests released yesterday showed that US banks need to raise a total of US$74.6bn in capital, which Federal Reserve Chairman Ben S. Bernanke said should reassure investors about the soundness of the American financial system.
The Libor-OIS spread, a barometer of the banks' willingness to lend, fell to the lowest level in more than nine months. The Libor-OIS spread, the difference between three-month dollar Libor and the overnight index swap rate, narrowed two basis points to 73 basis points, the lowest level since Aug. 1.
The TED spread, the difference between what the US Treasury and banks pay to borrow for three months, also narrowed two basis points, to 76 basis points, the lowest since May 27. Libor surged as high as 4.82% in October following the failure of Lehman Brothers. The Libor-OIS spread ballooned to 364 basis points.
In currency trading, the dollar fell versus the euro and the yen. The dollar declined to a six-week low against the euro as the jobs report reduced demand for relative safety. The yen slid versus all but two of the 16 most actively traded currencies. The Japanese currency touched a seven-month low against Australia’s dollar this week as optimism surrounding an impending economic recovery spurred demand for risky but high-yielding assets.
Crude oil rose to the highest level since November and gained 10% last week. US light crude oil for June delivery rose US$1.92 to settle at US$58.63 a barrel on the New York Mercantile Exchange. Futures had the largest weekly gain since the week ended March 20.
COMEX gold for June delivery fell 60 cents to settle at US$914.90 an ounce.
The MSCI World Index added 2.1%, extending its weekly gain to 6.4%. The benchmark index of 23 developed countries has surged 38 since March 9. European stocks climbed for a second week. The Dow Jones Stoxx 600 Index added 4.6% to a four-month high of 209.51. The measure has surged 33% since March 9, erasing its 2009 decline.
National indexes rose in all 18 western European markets. Germany’s DAX Index climbed 3%, while France’s CAC 40 added 4.8%. The UK's FTSE 100, which was closed for a holiday on May 4, advanced 5.2%.
Indian market ended in the red on Friday as traders and investors preferred to book some profit at higher levels. After trading in a range in the first half, key indices slipped sharply as selling in the banking and IT stocks dragged the markets lower. The metal stocks which were in demand in the previous trading session also witnessed some offloading.
However, the NSE Nifty after hitting an intra-day low of 3,582, the index found strong support at around 3,610 levels. Finally, the BSE Sensex slipped 240 points to close at 11,876 and the NSE Nifty fell 63 points to close at 3,620.7.
Among the 30-components of Sensex, 26 ended in the negative terrain and 4 ended in the green. Top losers were Wipro, ICICI Bank, Reliance Infra, Tata Steel, HDFC and RCom.
Among the major gainers were JP Associates, Hindustan Unilever, L&T and Grasim.
Among the BSE Sectoral indices BSE Bankex index was the top loser, the index lost 3%. The other major losers were BSE Metal index (down 2.3%), BSE IT index (down 2.3%) and BSE Teck index (down 2%).
Market breath was almost even, 1,262 advanced against 1,268 declines, while, 91 remained unchanged.
Subsidiaries of Exxon Mobil Corporation and Petronet LNG Ltd announced agreement has been reached on intent to supply LNG from the proposed Gorgon LNG project in Australia for the Kochi terminal in India.
The parties said they would continue working on binding agreements to conclude the purchase and sale in June. The agreement will provide for ExxonMobil's subsidiaries Mobil Australia Resources Company Pty Ltd and Mobil Exploration & Producing Australia Pty Ltd to supply approximately 1.5 MTA (million tons annually) of LNG with the potential for additional supply, for a 20-year term.
Petronet LNG MD Prasad Dasgupta said "Petronet LNG looks forward to finalizing the agreements and moving forward with the LNG infrastructure needed to supply natural gas consumers in the Kerala region."
ExxonMobils Luke Musgrave, Vice President LNG -Australia. said "We are pleased to move forward with Petronet LNG on securing LNG sates from the Gorgon Project."
Shares of Petronet LNG were up 2.5% to Rs53 after hitting an intra-day high of Rs53.5 and a low of Rs51 recording volumes of over 1.2mn shares on BSE.