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Thursday, May 06, 2010

Spare some trouble


In order to be happy, think of the ills you have been spared - Joseph Joubert.

Waiting on the sidelines may have spared many investors the wild swings of recent days. The Greek storm continues to rattle world markets. Risk appetite has tumbled and will take a while to recover. Public protests are mounting in Greece, stoking concerns whether it will be able to attain the proposed cuts in budget deficit. Other members of ‘PIIGS’ like Spain and Portugal are staring at further downgrades. The idea of EU as a unified, cohesive economic bloc and euro as its common currency has taken a beating. Let’s hope the crisis subsides sooner than later.

We expect some more trepidation at start today. Things might stabilize later, especially if global markets rebound. Global sentiment could improve if US monthly jobs data turns out to be strong. As of now, taking a decisive call is best postponed, though one may dabble with few counters for long-term purpose. Technically, the NSE Nifty has support at 5000 though a break below 200-day DMA of 4950 could potentially drag it down further. Resistance is seen around 5300.

US stocks recovered from session lows to end down amid what appears to be a worsening debt crisis in Southern Europe. Crude oil is hovering around $80 per barrel. The Dollar index is close to 84.

US Treasury yields touched their lowest in 2010. Rates reached the lowest since December, as worries about the financial state of the euro zone weigh on stocks and increase the appeal of US debt.

The euro hits its weakest level against the dollar since April 2009 while the FTSE All-World equity index fell 1.7% to a two-month low. The euro has dropped to a one-year low against the dollar, with the breach of the $1.30 level sparking concerns that global reserve managers would reassess their holdings of the single currency.

The extent of the losses on London’s equities market eased, but ongoing worries about the Greek debt crisis weighed on financial stocks. Fears that Greece may not be the only eurozone economy in need of bail-out cash send the region’s equity markets lower.

China’s benchmark stock index continues to fall and hit its lowest level in seven months as investors fretted about government measures to cool the property market and a flood of new bank shares coming to market.

Markets in Japan and South Korea are down sharply this morning. These markets shut yesterday. Japanese markets have been closed for 3-4 days. Other Asian markets are relatively better off.

The European Central Bank (ECB) will hold a meeting to review interest rates. Jean-Claude Trichet will be fighting for the credibility of the ECB as well as the euro as he faces questions over the institution’s decision to throw away collateral rules for Greek debt.

Results Today: Ajanta Pharma, Amar Remedies, Bharat Bijlee, Dr. Reddy's, PNB, RCF, Swaraj Engines, Torrent Pharma and Union Bank.

FIIs were net sellers of only Rs15.89bn in the cash segment on Wednesday on a provisional basis, according to NSE web site. Local institutions were net buyers of Rs6.91bn. In the F&O segment, the foreign funds were net buyers of Rs16.3bn. FIIs were net buyers of Rs1.04bn in the cash segment on Tuesday, as per the SEBI data.