Enjoy when you can, and endure when you must.
The health of the Indian economy seems to be getting better by the day if the latest reports on manufacturing and foreign trade are any indication. Hopefully, the wealth will also follow likewise on the bourses. Auto sales remain on the fast track, underscoring a pick-up in consumer confidence. The only drag is a sub-par credit growth and dwindling tax receipts. They should also start improving in the coming months. That will partly hinge on the Government action or lack of it, if any. Budget should make things amply clear as far as the policy roadmap is concerned. Till then, the market may remain sideways and rangebound.
Today we expect a healthy start on the back of firm global cues. The key indices may run out of steam if global markets fail to sustain Monday’s rise. The broader market resumed its out-performance of large caps and might extend the same. But, be extremely careful of what you are buying. With some improvement in sentiment, the Nifty may once again target 5000 but will face bumps along the way. Fresh selling is not ruled out at higher levels amid mounting external worries.
Foreign funds continue to be net sellers and pose a considerable risk to any meaningful bounce back from recent reversals. Among the other risk factors include: further RBI tightening on spike in inflation, uncertainties over monsoon and anxiety about policy-making. Fitch has warned India of deteriorating Government finances. Any further slippage and India's sovereign rating could be downgraded, Fitch says.
Some risks also remain on the external front. China may extend its recent tightening measures as the economy shows signs of overheating. The US economy has rebounded but is in danger of losing the momentum. In Europe, the major concern is on possible debt default by Greece and poor fiscal health of other nations like Portugal and Spain. Even other advanced economies like the UK and Japan are yet to fully recover from the downturn triggered by the financial meltdown.
US stocks closed higher on Monday, starting off a new month with strong gains, as investors welcomed better-than-expected reports on personal income, manufacturing and Exxon Mobil's profit.
The Dow Jones Industrial Average rose 118 points, or 1.2%. The S&P 500 index gained 15 points, or 1.4%. The Nasdaq added 24 points, or 1.1%.
Market breadth was positive. Gains were broad based, with 28 of 30 Dow components rising.
Wall Street ended one of the worst months in nearly a year Friday, with the Dow, S&P 500 and Nasdaq all closing at two-month lows. President Obama's plan to restrict trading at big banks, China's bank lending curbs and global debt worries all rattled investors.
But investors used the selloff as an opportunity to get back into stocks, continuing last year's trend.
With the US market up more than 50% from the lows of last March, a correction of 10% to 15% was not out of the question. Between the high on Jan. 19 and Friday's lows, the S&P 500 lost just under 7%.
There could be a further selloff on Wall Street, say some market observers. Equity valuations point to further consolidation or even an extended correction for the US stock market, among other indicators.
Exxon Mobil reported a profit of $6.05 billion or $1.27 per share, down about 18% from the fourth quarter of 2008 when oil prices were lower and fuel demand was higher. Nonetheless, results topped the forecasts of analysts.
With around 45% of the S&P 500 having reported results, earnings are currently on track to have risen 206% from a year ago, according to the latest from Thomson Reuters. But the rise is mostly due to cost-cutting and easy comparisons to an abysmal fourth quarter of 2008.
The financial sector in particular is set to bounce back. Strip out financial sector results and earnings are only expected to rise 15%. Revenue is set to rise about 7% year over year. Without financials, revenue is expected to rise about 2%.
President Obama unveiled a $3.8 trillion budget for 2011 that looks to both support the still-fragile economy and temper the nation's growing deficit.
Personal income rose 0.4% in December, the Commerce Department reported, surprising economists who were looking for an increase of 0.3% on average. Income rose 0.5% in the previous month.
Personal spending rose 0.2% after rising 0.3% in the previous month. Economists thought it would rise 0.3% in December.
The Institute for Supply Management's manufacturing index rose to 58.4 in January from 54.9 in December. Economists thought it would rise to 55.5.
Construction spending fell 1.2% in December, worse than the drop of 0.5% economists were expecting. Spending fell 1.2% in November.
Toyota announced plans to fix millions of gas pedals in recalled vehicles and said it has already shipped out parts to dealers. The fix eliminates the problem that caused pedals to stick, which prompted the recall of 2.3 million vehicles in the United States. Toyota shares gained 3.8%.
The dollar fell versus the euro and gained versus the yen.
COMEX gold for February delivery rose $21.30 to settle at $1,104.30 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.
US light crude oil for February delivery added $1.54 to settle at $74.53 a barrel on the New York Mercantile Exchange.
Treasury prices fell, raising the yield on the 10-year note to 3.65% from 3.58% late on Friday.
European shares shook off early losses to close higher on their first session of the month, helped by gains for airline Ryanair and bid speculation surrounding utilities.
After spending most of the session in the red, the pan-European Dow Jones Stoxx 600 index finished up 0.6% to 248.42, paring year-to-date losses to 2.2%.
Some analysts believe the recent shaky events will most likely turn out to be manageable and not enough to de-rail the economic recovery. Also falling equity prices and rising earnings have left European equities as cheap as they have been since the July 2009 correction.
The UK's FTSE 100 index rose 1.1% to 5,247.41, the German DAX index added 0.8% to 5,654.48 and the French CAC-40 advanced 0.6% to 3,762.01.
Key indices picked up some pace today after going through phase of uncertainty and volatility last week. NSE Nifty was up by 18 points to close at 4,900. The BSE 30-share Sensex closed flat at 16,356, rebounding from day’s low of 16,161 and touching a high of 16,422. Consumer durables, metal, IT, healthcare and auto stocks were among the major gainers on Dalal Street.
Earlier, in the day, tracking weak cues from the Asian markets, Indian markets opened lower. However, they recovered from day's low and recouped all the intraday losses after the latest data showed that India's exports rose for the second straight month in December 2009. A recovery in Asian stocks and higher US index futures also aided a strong intraday rebound on the domestic bourses.
FIIs were net sellers in the cash segment on Friday at Rs9.96bn on a provisional basis. The local funds were net buyers of Rs10.11bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs4.9bn.
Auto companies were among the major gainers announcing sales figures. Domestic sales jumped 67.4% to 28,988 units, while exports surged 299% to 1,161 units in January 2010 over January 2009. Tractor sales increased 73% to 16,879 units.