It is only possible to live happily ever after on a day-to-day basis.
A mildly happy opening is on the cards following Friday’s recovery and some firmness in global markets. US markets will remain closed on account of Labour Day. As a result, the world market may not witness any major action.
We are just a few days away from marking the first anniversary of the September crises. To say that the world has changed a lot since the earth-shattering event would be an understatement. Last week, policymakers from the G20 gathered in London in the run up to this month’s major summit in Pittsburg. The conclusion at the end of the two-day meeting was that the recession has eased considerably, but we cannot afford to be complacent. The group also concurred that the so-called ‘exit strategy’ should be put on hold till we are completely out of the woods.
In other words, there is optimism in the air, though a measured one. Aggression can wait for a while, as the recovery will be in fits and starts and not leaps and bounds. Any advance will be tempered by periodic burst of reversals or subdued activity. A major breakout can happen only if global markets resume their uptrend. Fund flows also need to improve considerably. Take each day as it comes.
The week is fairly light on economic reports as far as Wall Street is concerned, with readings on the trade gap, weekly jobless claims and consumer sentiment being the standouts. September historically has been a weak month on Wall Street. Much will hinge on incremental good news, either corporate or economic.
OPEC members will meet on Sept. 9 to review the policy on supplies. The cartel is unlikely to make any material changes in output quotas.
The China market also needs to be followed after the recent turbulence in that market and its fallout on world equities. Meanwhile, Chinese authorities plan to ease rules on foreign investment, including provisions to raise investment limits by 25% and to shorten the duration of 'lock-ups' on certain types of investments they make. The Chinese government has also said that the curbs on bank lending will be undertaken over a period of time.
The Oil India IPO opens today and will close on Sept. 10. ONGC could stay firm as investors tend to compare listed companies in similar line of business. Uttam Galva will be in focus after ArcelorMittal said that it will become a co-promoter. The steel titan has launched an open offer at Rs120 per share.
FIIs were net sellers at Rs4bn in the cash segment on Friday on a provisional basis while the local funds pulled out Rs53.5mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs107mn. On Thursday, FIIs were net buyers of Rs589mn in the cash segment. Mutual Funds were net buyers of Rs267mn on the same day.
US stocks rose on Friday amid low volume ahead of the Labor Day weekend, as investors focused on the positives in a mixed report on the labor market. However, all the three major stock indexes ended the week lower.
The Dow Jones Industrial Average gained 96 points, or 1%, to 9,441.27. The S&P 500 index added 13 points, or 1.3%, to 1,016.40. The Nasdaq Composite index advanced 35 points, or 1.8%, to 2,018.78.
On the whole, the jobs report was okay, suggesting moderation in job losses. But the market is saturated with good news and is starting to show fatigue after a 50% rally in the S&P 500 since early March.
Stocks tumbled in the first three sessions of this week as investors worried about the health of the US economy. There was a late-session advance on Thursday as some of the bank and technology shares that slumped earlier in the week bounced back.
Employers cut 216,000 jobs from their payrolls in August, the Labor Department reported, after paring a revised 276,000 jobs in July. The month brought the smallest number of job cuts since August 2008. Economists had forecast 230,000 job cuts.
The unemployment rate, generated by a separate survey, rose to 9.7% from 9.4%, a 26-year high. Economists had expected unemployment to rise to 9.5%. Unemployment is expected to hit 10% by the end of the year or early 2010, even as the US economy is starting to recover.
Select financial shares rose. The KBW Bank index added 1.4%.
A number of truckers, airlines and railroad shares rose, now that oil prices have come down off 10-month highs set last week. Fuel prices are directly linked to the profitability of transportation companies. The Dow Jones Transportation average gained 2%.
Apple shares rose ahead of its media event next week where it is expected to introduce iPod Nano and Touch models that include digital cameras. Investors are also wondering if CEO Steve Jobs, now back at work after a six-month medical leave, will make an appearance. Apple shares have nearly doubled this year.
Other big tech gainers included Microsoft, IBM, Cisco Systems.
US light crude oil for October delivery rose 6 cents to settle at $68.02 a barrel on the New York Mercantile Exchange. Oil prices have been slipping since hitting a 10-month high just below $75 a barrel late last month.
COMEX gold for December delivery fell $1 to settle at $996.70 an ounce, after inching closer to the psychologically significant $1,000 level over the last few sessions.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.44% from 3.34% late on Thursday.
In currency trading, the dollar fell versus the euro and the Japanese yen.
European shares climbed. The pan-European Dow Jones Stoxx 600 index rose 1.2% to 233.40, though it finished in negative territory for the week. The UK's FTSE 100 index rose 1.2% to 4,851.70, while Germany's DAX index climbed 1.6% to 5,384.43 and the French CAC-40 index advanced 1.3% to 3,598.76.Indian markets snapped a five day losing streak on Friday led by buying in the index heavyweights like Reliance Industries, L&T, HDFC, ITC and ONGC. Among the sectoral indices, the Auto, Metals and the Capital Goods stocks were among the major gainers even the Mid-Cap and the Small-Cap participated in the upswing.
The BSE Sensex gained 291 points or 1.9% at 15,689 after touching a high of 15,741 and a low of 15,358. The index opened at 15,425 against the previous close of 15,398. The NSE Nifty gained 86 points to shut shop at 4,679.
In Asia, the Nikkei in Japan slipped by 0.3% at 10,187 while Australia's S&P/ASX ended higher by 0.2% at 4,435. The Hang Seng index in Hong Kong surged 2.8% at 20,318. Shanghai index in China was up by 0.5% at 2,861.
In Europe, stocks were in the green. The FTSE in the UK was up 1%, The DAX in Germany was up 0.8% and the CAC 40 index in France was up 0.5%.
Coming back to India, among the BSE sectoral indices, the Auto index was the top gainer, surging 3%, followed by the Metal index that was up 2.8%. The BSE Capital Goods index up 2.2% and the BSE Oil & Gas index was up 2.1%.
The BSE Mid-Cap index gained 1% and the BSE Small-Cap index gained by 1%.
Among the 30-components of Sensex, 28 stocks ended in the green and only TCS and Tata Motors ended in the negative terrain. Among the major gainers were Reliance Industries, HDFC, L&T, ITC and ONGC.
Outside the frontline indices, the big gainers in the broader market were IFCI, Praj, Hind Zinc, IDBI Bank, GMDC and CESC. On the other hand, losers included Renuka, United Spirits, Sun TV, IRB and Glaxo.
The top gainers: The top gainers in the Sensex were Maruti Suzuki (up 8.8%), Hero Honda (up 6.9%), Hindustan Unilever (up 4.9%), Reliance Capital (up 3.7%) and Tata Motors (up 3.6%).
The Top Losers: The top losers in the Sensex were Bharti Airtel (down 6.9%), BHEL (down 5.1%), Reliance Industries (down 4.5%), Ranbaxy Labs (down 3.8%) and Tata Power (down 3.7%).