Another slippery start

All progress is precarious, and the solution of one problem brings us face to face with another problem. Martin Luther King Jr.

World equity markets managed good bit of progress thanks largely to a sudden turnaround in the battered Chinese market. Risk tolerance improved with the dollar falling and the euro climbing. Crude oil is hovering near $72 a barrel mark while gold continued to slip.




However, the feel-good may just prove to be short-lived as most Asian markets are in the red this morning. Also, US stocks retreated from session highs. The Dow lost over 100 points in intra-day trade. A drop in a key US non-manufacturing gauge seems to have spooked the sentiment on Wall Street.

Japan's Nikkei Average ended morning session down 0.9%. China’s stocks are mostly flat while the Hang Seng is down. We expect another flat to slightly lower start for our markets. The overall mood will remain at the mercy of global cues. The Sensex and the Nifty may remain rangebound as investors await the first batch of quarterly results. The Nifty is expected to remain in the range of 5210-5340 till there is a conclusive breakout on either side.

FIIs were net buyers of Rs3.42bn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs842.1mn. In the F&O segment, they were net buyers at Rs6.44bn. On Monday, the FIIs were net sellers of Rs2.16bn in the cash segment.

US stocks snapped a seven-session losing streak on Tuesday as trading resumed after an extended weekend but the main indices came off their day's highs by the close after a measure of service sector's health showed a decline.

The Dow Jones Industrial Average was up more than 170 points at one point. But those gains dwindled and the blue chip benchmark finished up 57.14 points, or 0.6%, at 9743.62, to snap a seven-session losing streak. The Dow had ended Friday's session at an 8-month low, closing lower for seven straight sessions, its worst streak since October 2008.

The Standard & Poor's 500 index rose 5.48 points, or 0.5%, to end at 1,028.06. The Nasdaq added 2.09 points, or 0.1%, at 2,093.88 after having risen as much as 44 points in the morning before dipping.

US light crude oil for August delivery settled down 11 cents to $71.98 a barrel on the New York Mercantile Exchange, giving up earlier gains.

COMEX gold for August delivery ended down $13.20 to $1,195.10 an ounce.

Treasury prices rose, lowering the yield on the 10-year note to 2.93% from 2.98% late on Friday.

The S&P 500 was dragged lower by its consumer-discretionary and materials sectors. Gains among energy and utilities stocks offset some of the benchmark index's losses. Some selling was also seen in retail, transportation and select technology stocks.

Stocks rallied through the early afternoon, slipped in the mid-afternoon, and fluctuated in the last hour of trading. Initially, investors followed European markets higher, but stocks ended up losing momentum as the day wore on.

Last week US stocks fell sharply as disappointing jobs and housing data fueled fears of a second-half slowdown in the US economy. The Dow had fallen for seven consecutive sessions, including a 4.5% drop last week. The S&P 500 had dropped 5% during its own five-session swoon. The Nasdaq's gain Tuesday, too, was its first in six tries.

Since peaking in late April, the Dow is down just under 14%, the S&P 500 is off 16% and the Nasdaq is off 17%.

In the day's only big economic report, the Institute for Supply Management's index on the services sector of the economy was released after the start of trading. The index fell to 53.8 in June from 55.4 in May. Economists expected it to fall to 55. A reading above 50 signals expansion in the sector.

The Reserve Bank of Australia left key interest rates unchanged but kept a door open for increases over time.

American depositary shares of BP rose 8.7% after a report said that Libya's sovereign wealth fund might invest in the company and the British oil giant announced that it would not issue new shares to cover costs associated with the oil spill.

Citigroup cut its targets on a number of retailers for the 2010 to 2012 period, citing a "hangover" for consumer spending in the second half and beyond after the first-quarter binge.

European stocks rallied, with the commodity sector pacing the advance, as investors picked up shares battered recently. The Stoxx Europe 600 index jumped 2.6% to 242.76. On Monday, the benchmark closed down 0.3%, its lowest level since May 25.

Mining companies were among the biggest gainers. Banks climbed as well, in particular lenders with big exposure to the more peripheral regions in Europe.

Spain successfully sold 10-year government bonds to raise 6 billion euros. The issue attracted bids worth 13 billion euros.

The French CAC-40 index rallied 2.7% to 3,423.36, the UK's FTSE 100 index climbed 2.9% to 4,965 and the German DAX index gained 2.2% to 5,940.98.

In the currency markets, the euro rose 1% to $1.2643 and sterling climbed 0.6% to $1.5191 against the dollar.