Realize what you really want. It stops you from chasing butterflies and puts you to work digging gold.- William Marston.
The bulls seem to have given up their chase for some time. The key indices are struggling to build on recent gains. The NSE Nifty has not been able to pierce 5500. With two days to go for the F&O expiry, it looks like the market might consolidate further in a tight range, unless we are blessed with a global rally. The start is likely to be a silent one. Wall Street ended on a flat note. Asian markets are largely subdued while European markets managed some gains. Things may turn choppy later on due to the derivative settlement.
We are all chasing the monsoon, says the RBI governor. Indeed, we are, as improved rainfall could have a cascading effect on overall growth. More importantly, enhanced farm output could soften the blow that we are taking in the form of double-digit inflation. So far, the weather Gods have been kind. Another couple of months are still left in the monsoon season. Hopefully there won’t be any major hiccups on this front going ahead.
The Nifty is expected to finish the July F&O series in a range of 5400-5500. Crystal gazing into August, we feel the Nifty will eventually cross 5500 but further ascent will hinge on global cues, fund flows, domestic economic data (especially inflation) and corporate earnings. The Nifty is likely to find support at 5300 and 5200 on the way down. It could of course slip further in case a sharp fall in world markets.
The RBI did spring a slight surprise by hiking the reverse repo rate by 50 bps, while raising the repo rate by 25 bps. Containing inflation remains a top priority for the central bank. But, the RBI governor cannot be expected to do the job of reining in inflation by himself. The Government should also takes concrete steps to check the inflation spiral that keeps coming back to haunt all of us every now and then.
Results Today: Alfa Laval, Allied Digital, Asahi India, Bajaj Electricals, Chennai Petro, Cinemax, CCCL, Corporation Bank, DB Realty, DLF, EID Parry, Emco, Essel Propack, GMDC, Havells India, HCL Tech, Jindal Steel, Kirloskar Oil, LMW, Lupin, M&M, Marico, Merck, MMTC, MRF, Mukand, Neyveli Lignite, Patni, Sobha Developers, Sun Pharma, Sun TV, Tata Comm, Trent, Uttam Galva and Voltas.FIIs were net sellers of Rs228mn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs2.2bn. In the F&O segment, they were net buyers at Rs15.07bn. On Monday, the FIIs were net buyers of Rs4.72bn in the cash segment. Mutual Funds were net sellers at Rs4.44bn on the same day.
US stocks closed mixed, with the Dow managing slim gains and the S&P 500 and the Nasdaq ending in red. Investors were caught between another batch of encouraging earnings and a downbeat consumer confidence report.
The Dow Jones Industrial Average closed up 12.26 points, or 0.1%, at 10,537.69, with 17 of its 30 components finishing higher.
After closing Monday above its 200-day moving average by roughly a point, the S&P 500 Index closed with a loss of 1.17 point, or 0.1%, at 1,113.84.
The S&P 500's rise above 1,100, breached on Friday, had technicians on alert. The next level of resistance comes at the 150-day moving average and the June high of 1,131. The index of large-cap U.S. stocks is still down year-to-date.
The Nasdaq Composite Index shed 8.18 points, or 0.4%, to 2,288.25.
Decliners only slightly outpaced advancers on the New York Stock Exchange, where volume topped 1.1 billion, or 89% of its one-month average.
The euro fell against the dollar, while the U.S. currency gained versus the Japanese yen.
US light crude oil for September delivery settled down $1.48 to $77.50 a barrel on the New York Mercantile Exchange.
COMEX gold's August contract fell $25.10 to $1,158 per ounce.
Treasury prices fell, and the yield on the 10-year note climbed to 3.05% from 2.99% late on Monday.
Better-than-expected results from a number of companies propelled markets in the morning. But that advance lost steam, with technology and consumer stocks hit the most.
Dow component DuPont reported higher quarterly sales and earnings that topped estimates, thanks to higher prices and increased demand. The chemical maker also boost its earnings forecast for the year. Shares gained 3.6%.
Swiss bank UBS reported higher quarterly profit that topped estimates, thanks to the stock market rally and currency trading gains. US-traded shares gained 9%.
Credit Suisse also reported a better-than-expected profit as tax and accounting gains tempered the impact of investment banking losses. Shares gained 4.4%.
Deutsche Bank reported higher quarterly earnings. But revenue was weaker due to a decline in its investment banking profit. Shares gained 2.8%.
Tellabs reported higher quarterly sales and earnings that beat estimates and lifted its fiscal second-quarter outlook. But shares of the communications gear maker dropped on concerns that it will lose some of its business building wireless networks for AT&T to a rival vendor. Shares fell 5.9%.
With just over one-third of the S&P 500 having reported, Earnings are currently on track to have risen 34% from a year ago, according to earnings tracker Thomson Reuters.
BP posted a huge quarterly loss of $17.2 billion due to costs connected to the Gulf of Mexico oil spill. The company also said that British CEO Tony Hayward will be replaced by Robert Dudley, a longtime executive with Amoco before BP bought the company in 1998, starting Oct. 1. BP shares fell 1.7%.
Consumer confidence declined in July, according to the Conference Board's closely watched index, which fell to 50.4 from an upwardly revised 54.3 in June. Economists had forecast a reading of 51. The report served to underscore the weak outlook for consumer spending heading into the fall, and caused stocks to erase early gains.
The Case-Shiller 20-city home price index rose 1.3% in May versus April and up 4.6% from a year earlier, suggesting pricing has stabilized.
European markets rose, led by financial stocks, as UBS and Deutsche Bank reported strong quarterly profits and bank regulators announced a compromise on capital rules. The Stoxx Europe 600 index ended up 0.4% at 258.11, rising for a sixth day.
The French CAC-40 index ended up 0.8% at 3,666.40. The German DAX index gained 0.2% to 6,207.31 and the UK's FTSE 100 index rose 0.3% to 5,365.67.
The Basel Committee on Banking Supervision proposed late on Monday that new capital and liquidity rules for the sector, which were more benign than expected. Among the key changes is a decision to allow some prudent recognition of capital held in minority-owned banking subsidiaries, as well as a relaxation on the treatment of deferred tax assets and a longer phasing-in period.
UBS shares jumped. It swung to a second-quarter net profit of 2 billion Swiss francs ($1.9 billion), well above analyst expectations for a CHF1.26 billion profit.
Shares of Deutsche Bank climbed, as the German bank reported a rise in quarterly profit.
BP shares fell after the company named Robert Dudley as its new chief executive, replacing Tony Hayward. It also reported a $17.2 billion loss in the second quarter, as it booked $32.2 billion in charges linked to its response to the Gulf of Mexico oil spill. In the same period a year ago, BP had posted a profit of $4.39 billion.
Shares of SAP declined after the business software firm reported that its second-quarter net profit rose 15% to 491 million euros, topping analyst forecasts. But, license revenues in Europe, the Middle East and Africa declined 9% year-on-year to 241 million euros.
Daimler lifted its earnings before interest and tax guidance for 2010 to 6 billion euros. It had said it would raise guidance when it reported preliminary figures just over a week ago, but didn't give a figure. Its shares dropped.