"Every day is a journey, and the journey itself is home." - Matsuo Basho
Fears of a slower global recovery just got re-ignited. Existing home sales in the US fell to their lowest level in 15 years, sending US markets into a tizzy. A lower start is very much on the cards. The good news is that Asian markets have not fallen as much as their western counterparts. So, the stock declines back home may not be severe; at worst, it will be a mildly lower start.
We expect the Nifty to reclaim the 5500 mark provided the global sentiment improves. Some short covering ahead of Thursday’s F&O expiry cannot be ruled out. Meanwhile, the upside if any appears to be capped given the lack of positive triggers. Be on guard as volatility might just inch higher in the near term. Stick to a stock-centric approach and don’t just take positions in a hurry.
The Nifty is expected to end the August F&O series near 5500 but it could stumble if the global situation worsens. It may find support near 5400 while resistance is likely around 5550 and later at 5600.
Shares of Prakash Steelage Ltd. will list on the bourses today. The company has set the issue price at Rs110 per share, at the upper end of the price band of Rs100-110. It raised Rs687.5mn through the public offer of 62.5 lakh shares, which was subscribed to 4.53 times.
FIIs were net buyers of Rs1.91bn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs6.89bn. In the F&O segment, the foreign funds were net buyers at Rs14.7bn.
US stocks closed sharply down on Tuesday as a downbeat report on existing home sales added to concerns about the health of the world's largest economy. In fact, the Dow Jones Industrial Average even slipped below the 10,000 mark briefly in intra-day trade.
The Dow closed down 133.96 points, or 1.3%, at 10,040.45, with the index moving back into a triple-digit loss late in the session, its fourth straight down session. The blue-chip average briefly fell as low as 9,991.18 earlier, its first dip below the 10,000 mark since the first week of July.
Of the Dow's 30 components, all but five closed in the red.
The S&P 500 Index fell 15.49 points, or 1.5%, to 1,051.87, with materials, health care and industrials weighing the most among its 10 industry groups. The Nasdaq Composite Index declined 35.87 points, or 1.7%, to 2,123.76.
Declining stocks outpaced advancers by a more than 3-to-1 ratio on the New York Stock Exchange, where 1.18 billion shares traded hands. That is 117% of the exchange's average volume over 30 days.
The dollar fell to a 15-year low against the Japanese yen in early trading, slipped against the euro, but climbed against the British pound.
The yield on the benchmark 10-year note approached a 17-month low, falling to 2.50% from 2.6% late on Monday. Treasury yields have been holding near historic lows recently as economic jitters have boosted the appeal of so-called "safe" investments such as government-backed debt.
In other markets, oil futures for October delivery fell $1.47 to settle at $71.63 a barrel. Gold for December delivery added $4.90, settling at $1,233.40 an ounce.
Economic reports have been rather dismal recently. People are very concerned about the US economy and some are even talking about a double-dip recession.
Disappointing economic news has sent investors rushing to the perceived safety of Treasurys and the Japanese yen, which hit a 15-year high against the dollar early on Tuesday.
The National Association of Realtors said existing home sales plummeted 27% last month to an annual rate of 3.83 million units, marking the lowest sales pace since the association began tracking the figure in 1999. Economists forecast a rate of 4.72 million units.
A report on new home sales is due on Wednesday, and economists expect a slight increase to an annual rate of 334,000 units in July from 330,000 in June.
Economic reports to be released later in the week include a report on new-home sales and weekly jobless claims, along with a measure of consumer sentiment and revised GDP data.
Meanwhile, a report released on Tuesday showed disagreements among the 17 key Federal Reserve officials about how to handle the economy peaked at a meeting earlier this month, according to The Wall Street Journal.
In a speech delivered in Indianapolis, Federal Reserve Bank of Chicago President Charles Evans said unemployment is now behind more housing defaults than careless lending.
Federal Reserve chairman Ben Bernanke is scheduled to talk about the economic outlook in an address later in the week in Jackson Hole, Wyo.
Barnes & Noble, which put itself up for sale earlier this month, posted a quarterly loss that widely missed expectations and said same-store sales fell in the first quarter. Shares of the bookseller ended more than 2% lower.
Shares of 3Par gained 3% after reports that Dell was preparing to increase its bid for the data-storage provider after Hewlett-Packard Co. topped its prior offer.
European stock benchmarks tumbled, with Ireland's benchmark index dropping more than 5%, as worries over the strength and sustainability of the economic recovery continued to rattle investors.
The Stoxx Europe 600 index declined 1.7%, or 4.31, to 249.45.
Equities in Ireland and Greece posted the steepest losses.
France's CAC 40 index slipped 1.8% to 3,491.11 and the UK's FTSE 100 index fell 1.5% to 5,155.95. Germany's DAX 30 index declined 1.3% to 5,935.44.
Vedanta Resources was the biggest decliner in the sector, losing 7.6% after Indian authorities rejected the firm's plan to mine for bauxite in the state of Orissa.
Shares in copper miner Antofagasta dropped 1.5% after the group announced a 91% jump in first-half profit to $451.2 million, but also said that copper production would be below its original forecast for the year.
Ireland's ISEQ stock index dropped 5.4%, as shares of building-materials group CRH slumped 17% in Dublin. CRH reported a 77% decline in first-half profit and said it's unlikely to achieve its second-half earnings forecast because of weak US markets.
Indexes in some other smaller European nations were also under heavy pressure, with the Greek ASE Composite index falling 3.4%.
The latest economic announcement from Germany confirmed an earlier estimate that the country's economy grew 2.2% in the second quarter -- he strongest quarterly growth since reunification in 1990.