Worried start in the offing!

That's the secret to life... replace one worry with another - Charles M. Schulz.

Earlier the worry was whether the Government would decontrol fuel prices. Now the worry is whether such a step will flare up inflation and invite an intra-cycle rate hike from the RBI. Whether the central bank will oblige or not only time will tell. The RBI is scheduled to meet on July 27 for the first quarter review.



Whatever the worries, the market has enough reasons to open cautious and more or less remain that way for the day. Shares of oil companies could extend Friday’s rally after the Government freed petrol prices and promised to deregulate diesel prices too. With opposition parties raising a hue and cry, one has to see if there is any rollback in fuel prices.

The market will consolidate in a sideways fashion given the near-term uncertainties - over both local as well as global. FIIs turned net sellers on Friday. Fund flows will have a bearing in determining the market’s mood. Progress in monsoon and quarterly earnings will also play a role in shaping the overall sentiment.

Among the key global data to watch out for this week will be the US jobs report on Friday. The news flow will remain mixed – meaning more choppiness in the coming days.

Group of 20 (G20) major economies have reached a deal on cutting high budget deficits and debt levels, but each member will adopt its own methods to reach its goals. US economy in the first three months of the year progressed at a slower pace than originally reported, the government said on Friday. But, the consumer sentiment numbers released on the same day came in ahead of estimates.

Japan's Nikkei Average ended morning down 0.3%, finding little support ahead of key data this week, including unemployment and industrial output. Japan’s retail sales rose at the slowest pace since January, a sign that government incentives to purchase cars and household appliances are fading.

Global sentiment remains fragile given the lingering uncertainties surrounding the euro-zone debt problems, US financial regulations and geo-political tensions. As a result, negative surprises on the data front could adversely affect risk appetite globally.

In terms of stocks, RCOM and GTL Infra may attract attention following the much-anticipated deal on telecom tower. Tata Motors' Board will meet today to consider fund raising plan. Both the Reliance group stocks may remain in focus after RIL and RNRL signed a new gas supply master agreement last week. Aqua Logistics board will meet to consider stock split and fund-raising.

The FIIs were net sellers of Rs3.07bn in the cash segment on Friday (provisionally), according to the NSE web site. Local funds remain cautious and were net sellers of Rs4.46bn. In the F&O segment, they were net sellers at Rs1.45bn. On Thursday, the FIIs were net buyers of Rs12.38bn in the cash segment. Mutual Funds were net sellers of Rs2.82bn on the same day.

US stocks closed mixed on Friday, with the blue chip Dow industrials dipping while the S&P 500 index and the Nasdaq managed to eke out slim gains. Financial shares rallied on relief that the new version of the Wall Street reform bill is less restrictive than had been expected.

The Dow's consumer components led its decline, as investors grew worried about how those sectors could be affected by a slump in consumer spending. The government cited weaker consumer spending in a downward revision to the estimate of first-quarter economic growth.

The Dow Jones Industrial Average closed down 8.99 points, or 0.1%, to 10,143.8. The measure fell 2.94% this week.

Financial components strengthened after US House and Senate lawmakers reached agreement on a landmark package of financial regulations in the early morning hours on Friday. The KBW Bank sector index adding 2.9%.

While the legislation will impose new capital requirements on banks and for the first time extend comprehensive regulation to the over-the-counter derivatives market, banks will be required to spin off only their riskiest swap-trading operations.

The Nasdaq Composite index climbed 0.27% to 2,233.48, but still closed down 3.74% for the week. The Standard & Poor's 500-stock index climbed 0.29% to 1,076.76. For the week, the S&P 500 fell 3.65%.

The dollar weakened against both the euro and the yen. The Dollar Index, reflecting the US currency against a basket of six others, down 0.5% recently. The euro inched higher versus the dollar but remained well above the four-year low of $1.188 hit last week.

The dollar was down 0.3% versus the yen.

US light crude oil for August delivery rose $2.11 to $78.62 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $10.60 to $1,256.70 an ounce after closing at a record $1,258.30 last Friday.

Treasury prices rallied, lowering the yield on the 10-year note to 3.11% from 3.12% late on Thursday.

Market breadth was positive and volume was robust because of the rebalancing.

US stocks seesawed in the morning after economic growth in the first quarter was revised lower. However, markets turned mixed near the close and trading volume spiked amid the impact of the annual rebalancing of the Russell indexes. They include the Russell 1000 index of the largest American companies and the Russell 200 index of smaller companies.

Banks, technology, drugmakers and energy shares were among the gainers on the day, but some of the consumer product names tumbled.

US stocks lost ground last week after a two-week advance, as economic worries resurfaced after a brief reprieve. The market had been firmly in a correction mode - down at least 10% from the highs - for over a month now. The recent attempt to erase those losses petered out last week amid worse-than-expected reports on housing, manufacturing and on Friday, GDP.

GDP grew at a 2.7% annualized rate in the first quarter versus the previously reported 3%. Economists thought growth would hold steady at 3%.

In other economic news, the University of Michigan's final consumer sentiment index for June was revised up to 76 from the previous reading of 75.5. Economists thought it would hold steady, on average. The index stood at 73.6 in May.

KB Home slid 9% after the home builder posted a 23% drop in second-quarter orders, providing further proof of a softening US housing market.

In the tech sector, Research In Motion (RIM) dropped 11% after the company reported a 20% rise in fiscal first-quarter profit but didn't ship as many BlackBerrys as analysts had anticipated.

However, business-software giant Oracle climbed 4.3% after the company reported a 25% rise in fiscal fourth-quarter profit and said new software license sales rose 14%.

American depositary shares of BP dropped to a 14-year low, closing down 6%. The oil giant said total costs of cleaning the Gulf of Mexico oil spill reached $2.35 billion. BP took additional steps to bolster its cash and available credit, adding roughly $5 billion more to its war chest than previously disclosed, according to reports.

European stocks declined on Friday, as losses for BP and automakers offset gains in banks. The Stoxx Europe 600 index declined 0.6% to 248.29, bringing weekly losses to 2.8% - the first weekly drop in five weeks.

The UK's FTSE 100 index shed 1.1% to 5,046.47, the German DAX index lost 0.7% to 6,070.60 and the French CAC-40 index fell 1% to 3,519.73.

The UK budget introduced a bank levy, and early on Friday, negotiators for the House and Senate agreed a package of regulatory reforms. In keeping interest rates unchanged, the Federal Reserve downgraded its assessment of the US economy, in part citing European debt worries.

The Financial Times reported that the Basel Committee of banking regulators will pare back some of its planned rules to force banks to set aside billions of dollars of extra capital. The Bank of England meanwhile called for slower changes to capital rules.

BP shares fell 6.4%, bringing market capitalization losses since April 20, when the Deepwater Horizon rig exploded, to over $100 billion.

Automakers were also weak, with Daimler shares down 3.3% and Volkswagen shares down 2.8% after both firms were downgraded to neutral from buy at UBS.