A conclusion is a place where you got tired thinking.
Bulls and bears cannot arrive at a conclusion though both appear to be tired. How else will you explain the sharp swing in the last two days? Technically, 4600 could prove to be a major support for the Nifty. Again there is nothing sacrosanct as further falls cannot be ruled out. On the upside, the bulls could face stiff resistance at around 4720-4830. Over the long-term, things should continue to look up as the recovery will meet with periodic bumps.
We expect a flat to slightly lower start as Asian markets are in the red and US stocks could not hold on to intra-day gains. Wild gyrations are a given as the market consolidates after hitting multi-month highs last month. Stay highly alert as the near-term outlook remains murky and volatility is likely to persist for a while.
A couple of labor market reports signal that the pace of layoffs in the US is slowing. All eyes are on Friday’s monthly numbers. Cisco results have surpassed consensus estimates. The Bank of England (BOE) and ECB will announce their latest policy decisions later today.
Earnings from Societe Generale, Bank of Ireland and Adidas were also cheered by investors. Meanwhile, US lawmakers passed a bill extending unemployment benefits by up to 20 weeks. The legislation also extends homebuyer tax credit into next year.
Markets, be they stocks, emerging markets or commodities, have rallied too far, too fast because the global economy will experience an anemic recovery rather than the hoped-for V-shaped recovery, New York University economist Nouriel Roubini said on Wednesday.
But, Jim Rogers, the investor who predicted the start of the commodities rally in 1999, said that Roubini is wrong about the threat of bubbles in gold and emerging-market stocks. “What bubble?” Rogers said. “It’s clear Mr. Roubini hasn’t done his homework, yet again.”
Investors worldwide are fueling “huge” bubbles that may spark another financial crisis by borrowing dollars in “the mother of all carry trades,” Roubini said. Many commodities are still down from record highs and equity markets aren’t on the brink of collapse, Rogers, chairman of Singapore-based Rogers Holdings, countered.
Separately, Arnab Das of Roubini Global Economics said that emerging markets are poised to extend their biggest rally in a decade as investors borrow dollars to buy stocks, bonds and currencies in the world’s fastest growing economies.
FIIs were net buyers in the cash segment on Wednesday at Rs2.34bn on a provisional basis. The local funds were net buyers of Rs5.57bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs26.39bn. On Tuesday, the foreign funds were net buyers of Rs3bn in the cash segment. FIIs' net investments in Indian stocks this year is above $14bn.
US stocks ended mixed on Wednesday, giving up bigger gains after the Federal Reserve kept interest rates unchanged and said that it will keep them low for an extended period.
The Dow Jones Industrial Average gained 30 points, or 0.3%, to 9,802.14. The Dow had gained as much as 156 points in the afternoon, but couldn't sustain those gains through the close. The S&P 500 closed nearly flat at 1,046.50, and the Nasdaq Composite index lost 2 points, or 0.1%, to 2,055.52.
Since hitting a 2009 closing high of 1097.91 on Oct. 19, the S&P 500 has lost just short of 5% as of Wednesday's close. That retreat followed a massive rally that saw the broad index gain 63% after bouncing off a 12-year low.
US stocks rose through the early afternoon as investors welcomed a pair of labor market reports that signaled the pace of layoffs is slowing. But markets were volatile in the afternoon, cutting gains after the Fed announcement, recharging the advance in the late afternoon, and then abandoning most of the gains by the close. The sentiment turned lower on a bearish banking call by influential analyst Meredith Whitney and the S&P 500's inability to hang on above a key technical level.
The Fed policymakers opted to hold interest rates steady at historic lows near zero, as expected, following its two-day policy meeting. In its closely watched statement, the bankers said economic activity is likely to remain weak for some time.
Payroll services firm ADP said Wednesday that employers in the private sector cut 203,000 jobs from their payrolls in October after cutting 227,000 in September. A consensus of economists expected 198,000 job cuts.
A separate report, from outplacement firm Challenger, Gray & Christmas, showed the number of planned layoffs slowed to 55,679 in October, down 16% from September.
In other economic news, the Institute for Supply Management's reading on the services sector of the economy fell to 50.6 in October from 50.9 in September. Economists thought it would rise to 51.5.
In company news, Time Warner reported weaker quarterly sales and earnings that topped forecasts. The company also boosted its full-year 2009 forecast and said that its outlook has improved, although it expects to take a $100 million charge in the quarter as it restructures its Time Inc. division.
Dow component Kraft Foods reported weaker quarterly earnings that topped estimates on weaker revenue that missed estimates. The company also boosted its 2009 earnings forecast and cut its revenue outlook. Shares fell 3%.
Drugmaker Merck rallied after it said it expects annual earnings growth of nearly 10% until 2013.
Comcast reported higher quarterly earnings that topped forecasts.
The dollar fell versus the yen and gained against the euro.
US light crude oil for December delivery rose cents 80 cents to settle at $80.40 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery climbed $2.40 to settle at $1,087.30 an ounce and hit an intraday record high of $1,098.50 an ounce in electronic trading.
Treasury prices fell, raising the yield on the 10-year note to 3.49% from 3.47% on Tuesday.
After the close, Cisco Systems reported weaker quarterly earnings and revenue that beat estimates. Cisco CEO John Chambers said current-quarter revenue would top estimates and that business conditions had bottomed at least six months ago. Cisco shares gained 4% in extended-hours trading.
European shares advanced, led by the mining sector and pushed up shares in Societe Generale, Bank of Ireland, Adidas and Marks & Spencer in the wake of forecast-beating results. The pan-European Dow Jones Stoxx 600 index rose 1.8% to close at 239.13, as miners advanced strongly after gold futures surged to a record and other metal futures also gained ground. A weak dollar and India's recent purchase of bullion continued to whet investors' appetite for the precious metal.
Germany's DAX index rose 1.7% to settle at 5,444.23, the French CAC-40 index gained 2.4% to end at 3,670.33 and the UK's FTSE 100 index climbed 1.4% to finish at 5,107.89.
After suffering badly for the past seven trading sessions, the bulls finally managed to muster up courage to stage a strong rebound. Today’s sharp turnaround erased all of Tuesday’s losses, which were triggered in reaction to a few adverse events abroad. But, thankfully the recent run of decline was arrested after the US market did fairly well overnight. Reliance Industries the index bellwether bounced back from its 200 DMA surging over 5%. The Supreme Court will hear the gas dispute case afresh as judgea withdrew from the judge panel. The Supreme Court will appoint a newpanel of judges to hear the case. High beta stocks which were badly battered on Tuesday bounced back strongly and were in demand through the day. The realty stocks and the Metals stocks were among the major gainers. Even the telecom stocks attracted buying interest. On Wednesday, the BSE Sensex surged 507 points to end at 15,912 after touching a high of 15,929 and a low of 15,487. The index opened at 15,487 against the previous close of 15,404. The NSE Nifty advanced 146 points to shut shop at 4,710. In Asia, Hang Seng index in Hong Kong advanced by 1.7% on the other hand, the Nikkei in Japan gained 0.5%, Australia's S&P/ASX ended higher by 0.2% and Shanghai SE Composite was up 1.7%. In Europe, stocks were in the green. The FTSE in the UK was up 0.7%, The DAX in Germany was up 1.5% and the CAC 40 index in France gained 1.3%. Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, surging 9.7%, followed by the Metal index that was up 5.3% and the BSE IT index was up 4%. Even, the BSE Mid-Cap index gained 3.5% and the BSE Small-Cap index was up 2.1%. Among the 30-components of Sensex, 27 stocks ended in the green and only Sun Pharma, Grasim and Tata Power ended in the negative terrain. JP Associate, DLF, Hindalco, Sterlite, Tata Steel and Reliance Industries were among the major gainers. Outside the frontline indices, the big gainers in the broader market were Indiabulls RealEstate, Educomp, Lic Housing, India Cement and Jet Airways. On the other hand, losers included Union Bank, Cummins India, Marico and Castrol India. Sugar stocks climbed despite the UP government announced that it has banned import of raw sugar. Bajaj Hind and Balrampur Chini were up a day after a proposed M&A deal between the two companies fell through. Shares of Bajaj Hindusthan have gained by 0.6% to Rs197, Balrampur Chini advanced 3% to Rs138, Renuka Sugars added 7% to Rs196 and Dhampur Sugar gained by 1.5% to Rs109. JSW Steel announced that it has posted 34% increase in Crude steel production for October 2009. The break-up of production is as below. Rolled Products out put was flat at 2.96 Lakh Tons in October 2009 as against 2.48 Lakh Tons posting a growth of 19%. Long Rolled Products production was at 0.75 Lakh Tons in October 2009 as against 0.30 Lakh Tons a growth of 145%. The production for the month of October'09 was lower sequentially due to unprecedented & incessant rains followed by floods in the southern part of India during the first week of the month disrupting the plant operations at Vijayanagar works. The Company's plant at Vijayanagar works is now operating normally. Shares of JSW Steel surged by 6% to Rs721. The stock opened at Rs727 and made an intra-day high of Rs690 and a low of Rs652. Total traded volumes stood at 0.6mn shares. Shares of TCS surged by over 3% to Rs625 after the company announced that it bagged a £150mn software implementation contract from Cardiff City Council, its first win from the local government space in UK. TCS is chosen as a strategic IT partner for 15 years by the City Council of Cardiff in Britain. TCS will bring its global technical expertise and private sector commercial know-how to support a major change in the way the council’s technology infrastructure supports its day-to- day operations and facilitates improved service delivery to the citizens and communities of Cardiff. Shares of Mahindra Satyam surged over 4% to Rs103 after the company announced its plans to collaborate with defence and security company Saab to develop its operations in India for the global defence and homeland security market. The stock opened at Rs100 and made an intra-day high of Rs104 and a low of Rs100. Total traded volumes stood at 3.6mn shares. Shares of M&M advanced by 3.5% to Rs927 after Domestic sales for the month of October 2009 stood at 17796 units, as compared to 14800 units for the same period last year, an increase of 20%. Combined September – October festive sales (domestic + exports) registered a record 36% growth at 35758 units, as compared to 26333 units for the same period last year. Total tractor sales (domestic + exports) for October 2009 stand at 18772 units, as compared to 15465 units for the same period last year, an increase of 21%.
YTD domestic sales registered a 42% increase at 98407 units, as against 69343 units for the same period last year. The company’s YTD sales (domestic + exports) registered a 38% increase at 102639 units, as compared to 74358 units for the same period last year.