No freedom from concerns!

Freedom in general may be defined as the absence of obstacles to the realization of desires.

The sleeping bulls had some freedom to push up counters as they woke up to a feel-good factor, largely due to upbeat remarks by the Fed and data showing end of recession in Germany and France. Obstacles remain with mixed economic data in the US taking the sheen off the world-wide rally. US retail sales unexpectedly fell in July. The recovery in American labour and housing markets remains fragile.

Despite raining gains for a day as if the dam of liquidity overflowed, we have to grapple with an impending drought and all its attendant problems, especially inflation. Exports too remain a cause for concern. At the same time, the latest IIP data does promise betters prospects, as does the proposed new Direct Tax Code. Given this backdrop, stock valuations and liquidity flows will play crucial role in determining the market’s near-term direction.

We expect a cautious start, as Asian markets are mixed. Wall Street too failed to capitalise on the global advance. The average man does not want to be free. He simply wants to be safe. The market has come a long way since early March. But, the million-dollar question is where do we go from here?. We need to see a few quarters of strong growth, not just one quarter.

Equity and commodity markets rallied, while emerging market and high yield currencies were in demand at the expense of the dollar and yen. The euro advanced against the dollar and the yen after the eurozone's two largest economies - Germany and France - reported surprise returns to growth in the second quarter. Crude oil prices rose above $71 per barrel while the sugar market extended its recent rally and base metals staged a broad advance as risk appetite strengthened.

FIIs turned net buyers at Rs6.31bn in the cash segment on Wednesday on a provisional basis while the local funds pumped in Rs1.83bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs9.42bn. On Wednesday, the foreign funds were net sellers at Rs1.1bn in the cash segment. Their net purchases of Indian stocks have crossed $7.3bn year-to-date.

US stocks ended marginally higher on Thursday after a choppy session, as the Fed's upbeat economic outlook and a positive government debt auction overshadowed a report showing a surprise drop in retail sales.

Wal-Mart's better-than-expected earnings report and a spike in financial shares also helped support stocks. News that recession ended in Germany and France also had a positive rub-off effect.

The Dow Jones Industrial Average index added 37 points, or 0.4%, to 9,398.19, ending at its highest point since Nov. 4. The S&P 500 index rose 7 points, or 0.7%, to 1,012.73, ending at its highest point since Oct. 6. The Nasdaq Composite index gained 10 points, or 0.5%, 2,009.35, ending at its highest point since Oct. 1. Financial shares added to the gains. The KBW Bank index gained 3.1%.

Thursday's jump followed a rally on Wednesday after the Fed held interest rates near historic lows and signaled that the US economy has finally started to stabilize.

US stocks had stalled as the major benchmarks struggled to remain above key psychological levels - 2,000 for the Nasdaq and 1,000 for the S&P 500. But shares managed to close decidedly above those levels on Thursday.

Both France and Germany posted GDP growth in the second quarter, surprising economists. In the US, the Fed provided a little optimism on Wednesday, saying that although economic activity is likely to remain weak, the decline is leveling out and financial market conditions appear to have improved.

Future growth could be constrained by consumers, who continue to scale up savings and avoid discretionary spending, as Thursday's retail sales and jobless claims reports made clear.

The Commerce Department reported that business inventories declined for the 10th straight month.

Retail sales fell 0.1% in July, the Commerce Department reported. The results were a surprise to economists who were looking for a rise of 0.7%, on average. Sales rose 0.8% in June.

Results would have been worse if not for the government's Cash for Clunkers program, which boosted auto sales. Retail sales, excluding autos fell 0.6% in July versus forecasts for a rise of 0.1%. Sales without autos rose a revised 0.5% in June.

The report is worrisome, as consumer spending fuels two-thirds of the US economic growth.

Ford Motor said it is boosting production for the rest of the year to meet increased demand as a result of Cash for Clunkers.

Wal-Mart earned 88 cents per share versus 87 cents a year ago and more than what analysts had forecast. Wal-Mart also said that it expects current-quarter earnings in line with analysts' forecasts.

But revenue fell more than expected and the company said customers were cutting back. The Dow component also said that sales at stores open a year or more, also known as same-store sales, fell 1.2% in the quarter. Nonetheless, investors focused on the positive and shares gained 2.7%.

The number of Americans filing new claims for unemployment rose to 558,000 last week, surprising economists who were expecting jobless claims to drop to 545,000 claims.

However, the Labor Department report also showed that continuing claims, which measures people who have been receiving benefits for a week or more, fell to 6,202,000 from 6,343,000 in the previous week.

The housing market remains constrained, according to a new report released Thursday. Foreclosure filings jumped almost 7% in July from the previous month, according to RealtyTrac. Filings rose 32% from a year ago.

In bonds, the last of the government's three debt auctions this week - this time $15 billion in 30-year bonds - saw strong demand, helping to support the market.

Treasury prices gained, lowering the yield on the benchmark 10-year note to 3.59% from 3.71% on Wednesday. The US government is auctioning $75 billion in debt this week as part of its efforts to reduce the deficit and fuel its recovery efforts. On Thursday, Treasury auctioned $15 billion in 30-year bonds to strong demand. The first two auctions had mixed results. Tuesday's sale of $37 billion in three-year notes saw stronger demand than other recent auctions. Wednesday's auction of $23 billion in 10-year notes showed demand roughly in line with recent levels.

US light crude oil for September delivery rose 36 cents to settle at $70.52 a barrel on the New York Mercantile Exchange. COMEX gold for December delivery rose $4 to settle at $956.50 an ounce. In currency trading, the dollar fell versus the euro and the Japanese yen.

Market breadth was positive and trading volume was moderate. It was the second slowest trading day of the year for the NYSE, eclipsed only by the day before the July 4th holiday.

European shares climbed. The pan-European Dow Jones Stoxx 600 index rose 0.8% to 230.47. Germany's DAX index rose 1% to 5,401.11, the UK's FTSE 100 index added 0.8% to 4,755.46 and the French CAC-40 index gained 0.5% to 3,524.39.

In addition, investor sentiment improved around the globe this month, turning bears into bulls in five of the world’s biggest stock markets, says a global survey. So, quite clearly the worst of the recession is history in most parts of the world. But, don’t uncork the bubbly yet, as periodic bad news will test the strength and sustainability of any rally. Weakness will persist for a while in some pockets of the world as well as individual economies before there are sustained signs of a turnaround.

The BSE Sensex surged 498 points or 3.3% at 15,518 after touching a high of 15,545 and a low of 15,208. The index opened at 15,208 against the previous close of 15,020. The NSE Nifty surged by 147 points to shut shop at 4,605.

In Asia, the Nikkei in Japan ended higher by 0.8% at 10,517 while Australia's S&P/ASX gained 2.1% at 4,435. The Hang Seng index in Hong Kong gained 2% at 20,861. Shanghai index in China added 0.9% at 3,140.

In Europe, stocks were trading in the green. The FTSE in the UK was up 1.1%. The DAX in Germany was up 1.3% and the CAC 40 index in France was up 1%.

Coming back to India, all the BSE sectoral indices ended in the green, the Realty index was the top gainer, gaining 7%, followed by the Metal index that was up 5.5%. The BSE Auto index up 4.4% and the BSE Bankex index was up 4.2%.

The BSE Mid-Cap index surged by 3.5% and the BSE Small-Cap index gained by 4.1%.

Within the Sensex, the major losers were DLF, ICICI Bank, Maruti, Tata Steel, Tata Motors, SBI and Sterlite.

Outside the frontline indices, the big gainers in the broader market were JP Hydro, IFCI, Bhushan Steel, Rolta, Ispat Industries and HCL Tech. On the other hand, losers included Jain Irrigation, Pantaloon Retail and Oracle Financials.

India's inflation fell to the lowest levels in three decades as the wholesale price index stood at -1.74% in the week ended August 1 as compared to 1.58% in the previous week. Inflation was at 12.91% during the corresponding week of the last year (wee ended Aug. 2, 2008). For the week ended 1st August, 2009 the WPI for "All Commodities" rose by 0.1% to 237.2 from 236.9 in the

Shares of Reliance Industries ended higher by 1.5% to Rs2023. The company is reportedly pulled out of an ONGC-led consortium which was formed to bid for a 40% stake in an oil field in Venezuela.

This means that ONGC now has to find another partner to bid for the foreign oil block, reports a business daily. The Venezuela oil block is estimated to hold up to 40-50bn barrels of proven oil reserves, reports added.

Shares Axis Bank gained by 1% to Rs877 after reports stated that the company plans to raise Rs9.4bn through preferential allotment of 18mn shares to its promoters. The stock opened at Rs876 and made an intra-day high of Rs888 and a low of Rs867. Total traded volumes stood at 0.64mn shares.

Shares of Ranbaxy gained by 1.6% to Rs294 after report stated that the company has entered protein supplement market with the launch of Revitalite. The stock opened at Rs295 and made an intra-day high of Rs299 and a low of Rs292. Total traded volumes stood at 0.8mn shares.

Share Rallis India gained by 4.5% to Rs767 after Tata Chemicals announced that the board of directors decided to increase its equity shareholding in Rallis India by offering to purchase equity shares from other qualifying "Promoter Group" Tata Companies (i.e. Tata Tea Ltd, Tata Sons Ltd, Tata Investment Corporation Ltd & Ewart Investments Ltd) through inter-se transfer of shares. The Board of Tata Chemicals approved a proposal to purchase upto 35.80% shares, in any event not exceeding Rs850/- per equity share.

Everonn Systems bagged Rs918.7mn order from Government of Uttar Pradesh for implementation of Computer Education in 1099 Middle Schools in Uttar Pradesh for a period of 6 years on BOOT model, covering over 6,60,000 students of classes 6th to 12th.

The Company has received letter of intent from Directorate of Secondary Education, Government of Utttar Pradesh. The total number of schools in Everonn's portfolio will be over 5500 schools with this order.

Shares of Everonn Systems gained by 6.5% to Rs370. The stock opened at Rs351 and made an intra-day high of Rs373 and a low of Rs350. Total traded volumes stood at 0.4mn shares.

Shree Renuka Sugars an integrated manufacturing company acquired 5% stake in the National Commodity & Derivatives Exchange Ltd. for Rs365mn, reports stated. The company bought 3% stake in the exchange from InterContinental Exchange Inc. and 2% from Goldman Sachs Group Inc., added the reports.

Shares of Renuka Sugar gained by 1.2% to Rs187. The stock opened at Rs187 and made an intra-day high of Rs189 and a low of Rs184. Total traded volumes stood at 1.4mn shares.

Dr. Reddy's launched Strea Professional, the company's first product in the non-invasive aesthetics segment in India. It is the first Bi-phasic superficial peel for specific imperfections avaialble in India.

The stock gained by 1% to end at Rs804. It had opened at Rs805 and made an intra-day high of Rs820 and a low of Rs800. Total traded volumes stood at 49,000 shares.

Shares of Sun TV surged by over 3.3% to end at Rs280. The company categorically denied news reports about the plans to foray into the aviation business by entering into a partnership with Star Aviation, an airline promoted by the diversified Dubai-based ETA Star group.

The news item is totally false and frivolous, Sun TV said in a statement. The group has no such intention or interest or is in discussions in acquiring stake in Star Aviation, it added. The news is totally unfounded and baseless, Sun TV said.