The end of a melody is not its goal, and yet if a melody has not reached its end, it has not reached its goal.
The year 2009 may be reaching its end but the market melody, which has been music to the bulls’ ears, doesn’t seem to be stopping. Most global equity benchmarks have in recent days either crossed or are on the verge of surpassing the annual peaks. For India, the Nifty has already made a new high for 2009, while the Sensex is within striking distance of doing so. The BSE benchmark may just achieve the goal with two trading sessions still to go, and momentum being positive. However, global cues are pretty tepid. Tomorrow we will have the last F&O expiry of 2009. So, some more volatility is a given.
We expect a flat to cautious start and yet another low volume day. Non-index counters may continue to hog the limelight but don’t get carried away by the momentum in these shares. The Nifty will find it tough to crack 5200. Support is likely to kick in at around 5100. In case of a fresh bout of buying in the near term, the Nifty could reach 5350. It hit an intra-day high of 5225 yesterday.
FIIs were net sellers in the cash segment on Tuesday at Rs537.3mn on a provisional basis. The local funds were net buyers of just Rs31.9mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs6.95bn. As per the SEBI figures, FIIs were net buyers of Rs8.11bn in the cash segment on Dec. 24. Mutual Funds were also net buyers at Rs1.44bn on the same day.
In the overseas markets, the euro and higher yielding currencies such as the Australian dollar were lifted against the US dollar after improved risk appetite. European equities extended their end-of-year rally for the sixth consecutive session though volumes were seasonally low. Japan's Nikkei 225 average eked out a four-month closing high.
Meanwhile, US employers see uptick in hiring in 2010 as compared to a dismal 2009. What's more, American consumers are more confident about that economy's prospects, according to Conference Board. Still, rising mortgage delinquencies signal more foreclosures, putting a damper on hopes that the housing market in the world's largest economy is recovering.
Copper prices reached a 15-month high in thin holiday trade amid concerns about supply disruptions as strikes affected production in Chile. Crude oil is hovering near $79 per barrel mark. The dollar index is trading slightly up at 78.03.
Inflation, interest rates, stimulus withdrawal and budget are the crucial factors that could have a major bearing on the market in the first quarter of the year 2010. One also has to see whether the liquidity tide that lifted all the boats in 2009 continues or tapers off.
US stocks closed nearly unchanged on Tuesday after yet another choppy session, as the Dow, S&P 500 and Nasdaq broke a six-session winning streak.
The Dow Jones Industrial Average closed at 10,545.41. The S&P 500 index ended at 1,126.19. The Nasdaq Composite index finished at 2,288.40.
US stocks had managed slim gains on Monday, with the Dow and S&P 500 ending at the highest levels since Oct. 1, 2008 and the Nasdaq closing at the highest point since Sept. 3, 2008.
Trading volume is expected to be light this week on Wall Street, with many market pros taking some or all of the holiday-shortened trading week off. All US financial markets are closed on Friday for New Year's Day and many participants will take an early leave early on Thursday ahead of New Year's Eve.
Year-to-date, the Dow has risen 20%, the S&P 500 has climbed 25% and the Nasdaq has gained 45%. All three indexes are up more substantially since falling to multi-year lows on March 9 amid the height of the financial crisis.
Next year is not expected to be as strong as 2009, as investors look for further evidence that the current economic growth can sustain without the government's emergency stimulus measures that managed to stave off another Great Depression.
In particular, investors will be looking for signs that housing market is improving, that consumers are spending again, and that the labor market is healing and enough jobs are being added to drive down the unemployment rate.
In the year 2010, investors will also be focused on when the Federal Reserve begins to raise short-term interest rates, and in what direction the beaten-down dollar moves. Overall, the market won't have a year like 2009. It will be a smoother ride, but the returns will be smaller.
In the day's major economic news, consumer confidence rose in December, the Conference Board reported Tuesday, hitting the highest point in three months thanks to a better outlook on jobs. Confidence rose to 52.9 from 50.6 previously. Economists thought it would rise to 53.
Separately, a report showed home prices flattened out in October after rising for four months in a row. The S&P/Case Shiller index of prices in the 20 largest metropolitan areas was unchanged in October from the previous month. Prices were down 7.3% from a year ago, versus analysts' forecasts for a drop of 7.1%.
COMEX gold for February delivery fell $9.80 to settle at $1,098.10 an ounce. Gold closed at an all-time high of $1,218.30 an ounce earlier this month.
US light crude oil for February delivery rose 10 cents to $78.87 a barrel on the New York Mercantile Exchange.
The dollar gained versus the euro and the yen.
Treasury prices rose, lowering the yield on the 10-year note to 3.80% from 3.84% late on Monday.
European stocks continued to advance amid thin volume, with the few traders taking part pushing the market to another 14-month high. The Dow Jones Stoxx 600 index rose 0.4% to close at 254.09, the highest close for the pan-European benchmark since early in October 2008.
The Stoxx 600 has climbed roughly 28% this year and moved more than 60% above the lows of March as the financial system has stabilised and as economies in the US and Europe have shown signs of expansion.
Germany's DAX rose 0.1% to end at 6,011.55, holding the 6,000 level for a second day, and the French CAC 40 added 0.3% to settle at 3,959.98. After a four-day hiatus, the UK's FTSE 100 gained 0.7% to close at 5,437.61.
Indian stocks closed marginally higher on Tuesday after yet another topsy-turvy day, as investors chose to remain on the sidelines with only two more trading sessions to go in what has been a stupendous year for equities.
All eyes are now on the new year and how the events will turn out. Though the worst appears to be over, thanks largely due to the emergency crisis-fighting stimulus measures, the recovery momentum needs to sustain.
The Government is fairly confident of attaining 7-8% GDP growth this year, but going ahead a spiraling inflation and its adverse fallout on the economy will have a bearing on the market sentiment. Earnings and the Budget will be the other big triggers.
Coming back to today's session, the day began on a firm footing, with the NSE Nifty touching a new high for the year early in the morning. However, shortly the key indices lost steam and hit the day's low.
The benchmarks made several attempts to head higher but encountered some resistance every time. The market fell sharply in the last half an hour or so after the Nifty had made a new intra-day high for 2009.
Finally, the BSE Sensex closed at 17,401.56, up 41 points or 0.2%. It had earlier touched a high of 17,486.05 and a low of 17,372.63. On the other hand, the Nifty shut shop at 5187.95, up about 10 points or 0.2%. It touched a high of 5214 during the day and a low of 5176.
The broader market outperformed the frontline counters, though they also gave up some of the gains in the late selloff. The BSE Small-Cap index and Mid-Cap index rose 1.2% and 0.5% to end at 8215 and 6674, respectively.
Among the BSE sectoral indices, Consumer Durables, Power and Metal indices were up 0.6-1%. BSE Banking, Capital Goods and PSU indices posted moderate gains. Pharma was a big loser after reports that top drugmakers will be asked to pay hefty sums for overcharging. IT and Realty shares were also soft.
Within the Sensex, the top gainers were Reliance Infra, Hindalco, ICICI Bank, Bharti Airtel, HDFC, NTPC and Tata Steel. The notable losers were Wipro, Sun Pharma, DLF, ONGC, TCS and HDFC Bank.
Outside the main indices, the big gainers were the likes of Titagarh Wagons, Apollo Hospitals, BL Kashyap, Texmaco, Time Techno, Ispat, Lok Housing, SREI Infra, Orbit Corp. Future Capital, Castrol India and SKF India.
Among the top losers included Great Offshore, Gammon India, Sasken, 3i Infotech, Amtek Auto, Dr. Reddy's, BGR Energy, GSK Pharma and Cipla.
Shares of Gammon India came under pressure after one of the company official was taken into policy custody following the collapse of an under construction bridge in Kota. The 50-metre bridge collapsed on Thursday and about 50 labourers were working at the scene.
Shares of NMDC Ltd. spurted after the public sector mining major said that the Government will disinvest 8.38% stake in it through a follow on public offer in the current financial year.
Max India shares climbed after Goldman Sachs agreed to pump in US$115mn in the company to fund insurance, healthcare and specialty plastics business.
Shares of Reliance Infrastructure gained after reports said that Reliance Power Transmission Ltd., a subsidiary of Reliance Infrastructure, has bagged two transmission projects worth Rs41bn connecting six states.
Shares of Sesa Goa rebounded after initial weakness after the Government raised the export duty on iron lumps from the current 5% to 10%, and also slapped a 5% export duty on iron ore fines.
In global markets, Asian stocks rose for a second day as higher oil and metal prices boosted commodity producers. The MSCI Asia Pacific Index rose 0.4% to 120.72 as of 7:19 p.m. in Tokyo, with about nine stocks advancing for every eight that declined. The gauge is headed for a 35% gain this year, its biggest annual increase since 2003.
Japan’s Nikkei 225 Stock Average, which rose to an intraday record of 38,957.44 on Dec. 29, 1989, increased less than 0.1% today to 10,638.06. Australia’s S&P/ASX 200 Index climbed 1.1% in Sydney, the steepest gain in the Asia- Pacific region. Hong Kong’s Hang Seng Index was little changed.
European stocks advanced for a sixth day, pushing the Dow Jones Stoxx 600 Index to the longest stretch of gains in three months, as higher commodity prices boosted raw-material producers. The Stoxx 600 added 0.1% to 253.53 as of 10:03 a.m. in London for the longest winning streak since Sept. 11. The gauge has surged 61% since March.