What you risk is what you value.
Though the world has weathered the financial storm well so far, one cannot convincingly say that we are out of the woods. For every 2-3 good news there is one bad news. China is overheated while Europe is facing certain debt issues. The US is growing but the quality of recovery is questionable. Unemployment is still pretty high in the matured economies.
For India, the big issue is inflation and its broader economic fallout. Interest rates are set to head north, slowly but surely. The Government has limited elbow room as fiscal deficit is not sustainable. With the economy doing well, a partial rollback of fiscal stimulus is definitely on the cards.
We expect a subdued opening owing to mixed global cues. Asian markets are down mostly, barring Japan. Chinese markets will resume trading next week. US stocks closed higher and European stocks rose for a third straight session. We expect a choppy session with a slightly positive bias. Budget will be a crucial event as will be the monsoon.
The NSE Nifty may find immediate support at 4895 and could face resistance at 4950. Beyond 5000, it will meet resistance at 5018 and later at 5045. In case of a major fall, 4700 should act as a good support. We see a near-term trading range of 4800 and 5000.
FIIs were net buyers in the cash segment on Wednesday at Rs5.2bn on a provisional basis while the local funds were net buyers of Rs1.97bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs7.77bn. On Tuesday, FIIs were net buyers of Rs2.57bn in the cash segment, while Mutual Funds were net sellers at Rs590mn, according to SEBI web site.
US stocks closed up on Wednesday, as investors considered a better-than-expected housing report, a mixed forecast from the Federal Reserve and some upbeat company news. The dollar firmed up, hitting dollar-traded oil, gold prices and stocks. Treasury prices plunged.
The Dow Jones Industrial Average rose 40 points, or 0.4%, to end at 10,309.24. The S&P 500 index rose 5 points, or 0.5%, to close at 1,099.51. The Nasdaq Composite index edged up 12 points, or 0.6%, to 2,226.29.
The dollar rose for a second day against the euro as signs that the US economy is gaining momentum fueled speculation that the Fed is moving closer to withdrawing stimulus measures. The dollar gained versus the euro and the yen, pressuring dollar-traded commodity prices.
US light crude oil for March delivery rose 32 cents to settle at $77.33 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose 30 cents per ounce to settle at $1,120.10.
Treasury prices tumbled, raising the yield on the 10-year note to 3.74% from 3.66% late on Tuesday.
US stocks clung to modest gains throughout the session as investors weighed the day's news against the headwinds that have punished stocks year-to-date.
Stocks rallied on Tuesday after Merck and Barclays released better-than-expected results and commodity prices rose. The Dow gained 1.7%, or 170 points, for its biggest one-day point gain since Nov. 9.
Tuesday's advance was an exception, and stocks have had a rough start to the year, with the Dow, Nasdaq and S&P 500 posting declines for four of the last five weeks. Concerns about the strength of any recovery have continued to worry investors.
While quarterly profit reports have been good, the economic news has been mixed. The economic recovery has been good, its not going to be as strong as had been anticipated.
In 2009, the Dow gained 18.8%, the S&P 500 rose 23.4% and the Nasdaq gained 44%. But the gains were even bigger off the multi-year lows of last March, with the Dow rising 59%, the S&P 500 rising 65% and the Nasdaq rising 79%.
The Fed released the minutes from its last policy meeting in the afternoon, as well as its revised economic forecast. Chairman Ben Bernanke and the other officials said unemployment should decline only modestly over the next few years, keeping the unemployment rate above the level that is typical during a recovery.
The US bankers also gave a slight boost to forecasts for economic growth this year, lifting the target to growth of between 2.8% and 3.5% in 2010 versus November forecasts for growth between 2.5% and 3.5%.
Housing starts rose 2.8% in January to a 591,000 annual unit rate, according to a National Association of Home Builders report released Wednesday morning. Economists thought it would rise to a 580,000 unit annual rate from a 575,000 unit annual rate in the previous month.
Building permits, a measure of builder confidence, fell 4.9% to an annual unit rate of 621,000 in January, versus forecasts for a drop to a 620,000 unit annual rate. Permits stood at a 653,000 unit annual rate in the prior month.
Industrial production rose 0.9% in January after rising 0.7% in the previous month, the government reported Wednesday. Economists thought it would rise 0.7%. Capacity utilization rose to 72.6%, as expected, from 71.9% in December.
Deere & Co. reported higher quarterly earnings that topped estimates on lower revenue that also topped estimates. The heavy equipment maker said that cost-cutting and the benefit of better currency rates helped offset the weak economic environment. Deere also boosted its 2010 sales forecast.
Walgreen said that it will buy rival drugstore Duane Reade in a deal valued at $1.08 billion including debt.
Toyota said that it plans to install a new brake override system in its cars, and that it will tighten controls on safety, in the aftermath of its recall of millions of autos due to faulty brakes. However, President Akio Toyoda said he won't testify before Congress at the hearing later this month. Shares of Toyota fell nearly 3%.
After the close, Hewlett-Packard reported higher quarterly earnings and revenue that topped expectations. Shares gained 1% in extended-hours trading.
Thursday brings the weekly jobless claims report from the Labor Department, the index of leading economic indicators (LEI) from the Conference Board, the January Producer Price Index (PPI) and the Philadelphia Fed index.
In addition, Wal-Mart Stores reports results before the start of trading. The retailer is expected to have earned $1.12 per share versus $1.03 a year earlier.
European shares advanced for the third straight session, boosted by strong earnings data from the financial sector. After rising 1.4% over the first two sessions of the week, the pan-European Dow Jones Stoxx 600 index added another 1.4% to close at 247.69. That move pared year-to-date losses to 2.4%.
The UK's FTSE 100 index rose 0.6% to close at 5,276.64, the German DAX index finished 1% higher at 5,648.34 and the French CAC-40 index advanced 1.5% to settle at 3,725.21.
Indian markets witnessed smart follow through buying on Wednesday thanks to overnight gains in the US and firm cues from the Asian and the European markets. Benchmark indices extended winning streak to second straight trading session with the NSE Nifty reclaiming 4900 levels.
Nifty has now gained over 120 points in just two days. The decisive up move had the leadership of index heavyweights like Tata Steel, Hindalco, Sterlite Industries and HDFC Bank.
The Metals, Auto and the banking indices were among the top gainers among the BSE sectoral indices. The BSE Mid-Cap and BSE Small-Cap index added over 0.7% each. However, the IT and Realty index were under pressure.
Stocks to be added in the F&O segment were in momentum ahead of the inclusion. NSE announced in its circular that 11 new stocks would be added from February 19, 2010 which is just 5 trading session away from the current series F&O expiry.
Finally, the BSE Sensex advanced 202 points to end at 16,429 it hit an intra-day high of 16,480 and intra-day low of 12,248. While the NSE Nifty gained 58 points to end at 4,914.
Among the 30-components of Sensex, 22 ended in the positive terrain and 8 ended in the red.
Outside the frontline indices, the big gainers in the broader market were Videocon Industries, Godrej Ind, Mundra Port, Aban Offshore and Educomp. On the other hand, losers included IB Real Estate, Bharat Forge, CESC and NMDC.
Shares of Tata Steel surged by over 6% to end at Rs584 after posting a group profit for the first time in four quarters.
The Group posted a profit after Minority Interest and Share of Profit of Associates of Rs47.26bn for the quarter ended December 31, 2009 as compared to Rs81.38bn for the quarter ended December 31, 2008. Total Income decreased from Rs332.34bn for the quarter ended December 31, 2008 to Rs266.11bn for the quarter ended December 31, 2009.
Shares of Bharti Airtel rebounded after days of severe offloading. The stock gained 3% to end at Rs279. According to reports, the company said that the acquisition of Zain Group's African assets would result in a total payout of US$9bn, which includes any loans payable by the operating companies to Zain Group, stated reports. The scrip opened at Rs273 it touched an intra-day high of Rs281 and a low of Rs273 and recorded volumes of over 1.6mn shares on NSE.
Shares of Tata Motors gained 1.5% to end at Rs711 after the company yesterday announced that it was entering the business of combat vehicles manufacturing for the defence sector. The company is also reportedly planning to bid to supply light bullet-proof vehicles to the Indian Army, with a possible order size of Rs3.5bn.
The Auto major also plans to increase prices of its commercial vehicles by 1-2% from April when the new emission norms become effective.
Shares of HDIL was absolutely unchanged to end at Rs314. Media reports stated that the company secured new slum rehabilitation project worth Rs20bn in Mumbai. The scrip opened at Rs316 it touched an intra-day high of Rs322 and a low of Rs311 and recorded volumes of over 7.2mn shares on NSE.
Bank of Baroda reportedly obtained a US$175mn term loan due 2013. The bank had canceled its planned sale of bonds denominated in U.S. dollars this month. Credit Agricole CIB, HSBC Holdings Plc and Standard Chartered Plc arranged the facility, stated reports.
The stock gained 1.1% to end at Rs577, it opened at Rs575 it touched an intra-day high of Rs580 and a low of Rs572 and recorded volumes of over 0.49mn shares on NSE.
Shares of ThinkSoft Solutions were locked at 20% lower circuit yet again. The stock has dropped over 40% in the two das. The scrip opened at Rs390 it touched an intra-day high of Rs390 and a low of Rs317.7 and recorded volumes of over 82,000 shares on NSE.
After surging over 300% from the time of its inception, shares of ThinkSoft Solutions is witnessing heavy selling. The stock had debuted at Rs100 a discount of 20% over the IPO of Rs125 per share.
Shares of Golden Tobacco are locked at 5% upper circuit to end at Rs139.40 after its board approved a plan to develop its north Mumbai property and move its manufacturing facilities to a new location. The scrip opened at Rs136.6 it touched an intra-day high of Rs139 and a low of Rs133.7 and recorded volumes of over 42,000 shares on NSE.