Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
The bears failed to make a big dash last month, but could yet again be licking their lips as the market struggles for direction. The fascinating thing is that every time the bears have attempted a comeback; the bulls have managed to make them run for cover. As a result, stocks are seeing dips and spikes without any significant change in the overall scenario.
Today we see another anemic start and a lackluster day. The key indices could continue to rise steadily and make new highs for the year. But, beyond a point they are likely to meet with some resistance. That level may turn out to be around 5200-5300 on the Nifty.
After a Marvelous Monday things have turned a bit quiet. Traded volume has cooled off from last week. Sensex and Nifty appear to be struggling above 17000 and 5000, respectively yet again. Technical and derivatives indicators are indecisive as well. Stick to stock specific action and keep a close track of relevant developments, both local and global, and you should do fine.
Inflows from local funds have turned negative though the overseas investors remain bullish. In short, the market is facing some resistance though there are no signs of a big selloff, not at least in the near term. We expect the market to trade sideways with a positive bias, depending on the trend in global markets.
FIIs were net buyers in the cash segment on Tuesday at Rs4.63bn on a provisional basis. The local funds were net sellers of Rs2.35bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs3.25bn. The foreign funds were net buyers of Rs6.79bn on Monday. Mutual funds were net sellers of Rs492mn in the cash segment on the same day. FIIs' net investments in Indian stocks this year has crossed $15bn, as per SEBI's web site.
US market rose for the nine time in the last 11 sessions, with the housing market returning to the spotlight as Home Depot reported signs of stabilization. European shares, however halted their recent advances, pressured by weakness in the banking sector. Most Asian stock markets ended slightly lower on Tuesday and are mixed this morning.
Gold extended its record-breaking run, helped by news of fresh central bank buying, while oil prices dipped after a strong rise in the previous session. Pound sterling rose to a two-month high against the euro on Tuesday after higher-than-expected UK inflation in October. Waning risk appetite took momentum from the FTSE 100, which fell back from year-highs as traders booked profits.
US stocks recovered from early losses to end a tad higher on Tuesday, closing at 13-month highs for the second day in a row, as strength in the commodity space offset weakness in the retail sector.
The Dow Jones Industrial Average rose about 30 points, or 0.3%, to close at 10,437.42. The S&P 500 index finished nearly unchanged above the key 1,100 level. The Nasdaq Composite advanced 0.3% to end at 2,203.78. All three indexes are at their highest levels since October 2008.
Stocks opened lower and struggled for most of the day as the dollar regained ground against rival currencies, reflecting a decreased appetite for risky assets. The tone improved in the last few hours of trading as oil and gold prices reversed direction.
The rebound in commodity prices boosted shares of energy and materials companies. But gains were limited by weakness in the retail sector after Home Depot and Target offered cautious earnings outlooks.
Tuesday's economic news was mixed. Government data showed inflation at the wholesale level remains subdued, while industrial production was weaker than expected in October.
Globally, the stock markets continue to look to the dollar for direction. When the US currency is weak, investors pile up on risky assets. If it is strong, they shed the risk a little bit. The dollar has hovered near a 15-month low against rival currencies in recent weeks.
However, after lifting the major indexes from lows of early March, investors have become a touch wary of going too aggressive on equity as the economic outlook remains cloudy.
The government reported that the Producer Price Index (PPI), the key measure of inflation for manufacturers, edged up 0.3% in October. Core PPI, which excludes volatile food and energy prices, fell 0.6%. The PPI was expected to have risen 0.5% for the month, according to a consensus of economists. The core was expected to have edged up 0.1% in October.
Before the start of market trading, the government also reported that industrial production rose 0.1% last month versus a forecasted 0.4% increase. In September, production rose 0.7%. Capacity utilization rose by 0.2% to 70.7%, a rate slightly below economists' expectations for 70.8%.
Home Depot reported a decline in third-quarter earnings to 41 cents per share from 45 cents in the year-ago quarter. While the results were better than 36 cent per share profit that analysts had expected, the company said it expects earnings for the full year to be down 13%.
Discount retailer Target reported an 18% increase in third-quarter profit, helped by gains in the company's credit card portfolio. But Target, which had suffered declining profits for the last eight quarters, remained cautious about the outlook for holiday spending.
TJX, which owns the TJ Maxx and Marshalls chains, reported a larger-than-expected quarterly profit on increased consumer demand for discount products. The company said it expects profit from continuing operations of 65 cents to 71 cents per share in the fourth quarter. Analysts surveyed by Thomson Reuters are forecasting a profit of 71 cents per share in the fourth-quarter.
On the higher end, Saks reported a quarterly profit, surprising analysts who were expecting the company to report a loss. However, the results were driven mostly by cost-cutting, and the company offered a cautious outlook.
Treasury prices rose, with the yield on the 10-year note falling to 3.33%.
The weak dollar recovered a little Tuesday. The dollar index, which measures the US currency against a basket of rivals, was up 0.7% to 75.38 from 74.92.
Oil prices rose 24 cents to settle at $79.14 barrel in New York.
The price of gold closed at an all-time high of $1,139.40 an ounce, up 20 cents from Monday's record close of $1,139.80.
Investors will digest reports on consumer prices and initial construction of new homes Wednesday morning. Later in the week, the government will report on the number of Americans filing first-time claims for unemployment benefits.
Meanwhile, European shares ended a four-session streak of gains, closing lower as automakers pared recent gains and banks came under pressure on concerns about capital levels.
After touching a 13-month high on Monday, the pan-European Dow Jones Stoxx 600 index fell 0.4% to close at 250.36.
The UK's FTSE 100 index declined 0.7% to end at 5,345.93, while Germany's DAX index lost 0.5% to settle at 5,778.43 and the French CAC-40 index shed 0.9% to finish at 3,829.06.
It was an absolute Tuesday twister for the Indian markets. After starting off with a negative bias and staying in the red till the last trading hour, a sudden bout of buying in the IT, Banking, Capital Goods and the Metals stocks aided the benchmark indices to end with mild gains.
NSE Nifty recovered nearly 50 points to close above 5,050 and the BSE Sensex recouped 170 points to shut above the 17,000 mark.
The IT stocks were in the limelight throughout the day, stocks like Infosys, TCS and Wipro were among the star performers, even the mid-cap IT stocks like Polaris, Mphasis and MindTree were in demand.
The index heavyweight Reliance Industries which held its Annual General Meeting today put on a disappointing show, the stock ended in the red, down by 0.7% at Rs2133.
Finally, the BSE Sensex rose 18 points to end at 17,050 after touching a high of 17,080 and a low of 16,882. The index opened at 16,052 against the previous close of 17,032. The NSE Nifty ended flat at 5,062.
In Asia, the Nikkei in Japan was down 0.6%, while Australia's S&P/ASX ended lower by 0.5% at 4,729. Shanghai SE Composite was up 0.5% and Hang Seng index in Hong Kong fell 0.5%.
In Europe, stocks were trading in the red. The DAX in Germany was down 0.2% and the CAC 40 index in France was down 0.2%. The FTSE in the UK was down 0.4%.
Coming back to India, among the BSE sectoral indices, the IT index was the top gainer, adding 2%, followed by the Teck index that was up 1% and the BSE Consumer Durables index was up 0.6%.
Major losers were BSE Realty index down 1.2% and BSE Oil & Gas index down 0.8%.
The BSE Mid-Cap index ended flat while the BSE Small-Cap index was marginally up by 0.2%.
Among the 30-components of Sensex, 15 stocks ended in the green and 15 ended in the negative terrain. TCS, Hero Honda, Infosys and Reliance Infra were among the top gainers.
On the other hand, among the major losers were ONGC, ACC, DLF, Bharti Airtel and RCom.
Outside the frontline indices, the big gainers in the broader market were Spice Tele, Glenmark Pharma, GMDC, Sintex Industries and Aban Offshore. On the other hand, losers included Hindustan Copper, United Phos, Mundra Port and RCF.
Shares of the Aviation firms’ crash landed after media reports flashed that the ministry said that it sees no reason to raise the existing FDI limit.
Shares of Kingfisher Airlines fell over 5% to Rs52.9, Jet Airways slipped by 2.3% to Rs445 and SpiceJet fell 3.5% to Rs46.2.
Shares of HDFC ended flat at Rs2754. The company along with Standard Life, UK plans to infuse Rs3bn in its life insurance venture HDFC Standard Life in H2FY10.
In the previous week, HDFC also diversified into education loans. It acquired a 41% stake in Credila Financial Services, a company that specialises in education loans, for Rs100mn. HDFC has acquired the stake from Merrill Lynch, which was an initial investor in the company.
Shares of Bharat Forge advanced by 2% to Rs274 after reports stated that the company is planning to foray into the power sector with an investment of up to Rs500bn with a targeted generation capacity of up to 10,000MW, over the next 10 years.
Reports stated that the company plans to set up power plants in Gujarat, Maharashtra, coastal Andhra Pradesh and Tamil Nadu.
Shares of Glenmark gained by 5.5% to Rs242 after reports stated that the company has settled patent litigation with Medicis Pharmaceutical Corporation and has entered into a co-development arrangement on its specialty drug to treat acne.
The stock opened at Rs229 and made an intra-day high of Rs244 and a low of Rs229. Total traded volumes stood at 0.7mn shares.