Dig where the gold is…unless you just need some exercise.- John Capozzi.
It’s a stock-picker’s market with main indices continuing to be stuck in a range even as individual stocks are hitting new highs. Small and mid-cap indices may extend their out-performance. We’ve had two tepid months of trading after a strong June and there are no signs yet of a convincing breakout. For the Indian market, September might just turn out to be similar to July and August.
Some sector churning is a given as investors and traders chase higher returns. Domestic economic data is expected to remain fairly robust though some softening is not ruled out. But global market trend will continue to cast a shadow over local markets.
Today’s start is likely to be cautious owing to shaky global markets. US stocks ended lower despite an encouraging report on jobless claims amid persistent worries over economic slowdown. Asian markets are in red, but not by much and European stocks managed modest gains. All eyes will be on revised US GDP data and Ben Bernanke’s speech. The Nifty may cross 5500 shortly but is likely to face resistance at higher levels.
There have been some concern over the elevated open interest positions in the F&O market lately and its potential ramifications on the market if the sentiment deteriorates further. Though the F&O rollover has been positive overall, the key indices are unlikely to witness a runaway rally given the risks associated with the global markets. Hence, one should act with prudence and not take undue chances although the bias for the Indian market will continue to be positive.
FIIs were net sellers of Rs2.76bn in the cash segment on Thursday (provisionally), according to the NSE web site. Local funds were net buyers of Rs389.3mn. In the F&O segment, the foreign funds were net buyers at Rs3.53bn. FIIs were net sellers of Rs2.9bn in the cash segment on Wednesday. Mutual funds were net sellers at Rs4.19bn on the same day.
Another round of sour US macroeconomic data during the week ending August 25 rekindled fears of a double-dip recession in the world's largest economy and battered equity markets around the world for a second straight week, according to EPFR Global.
Flows into EPFR Global-tracked funds shifted decisively towards those investing in fixed income assets, with US and Emerging Markets Bond Funds pulling in $2.5 billion and $1 billion respectively. US Equity Funds surrendered another $5.4 billion and flows into emerging markets equity funds hit a 13-week low.
Overall, investors redeemed $7.13 billion from EPFR Global-tracked equity funds, steered $5.15 billion into bond funds and committed fresh cash to Money Market Funds for the fourth time in the past five weeks.
US stocks closed lower on Thursday as lingering concerns on the strength and sustainability of the country's economic recovery overshadowed a better-than-anticipated data on weekly jobless claims.
The Dow Jones Industrial Average shed 74.25 points to 9,985.81, with all but two of its 30 components ending in the red.
The S&P 500 index declined 8.11 points to 1,047.22, with health-care companies and consumer staples weighing the most among its 10 industry groups. Material and industrial firms fared the best.
Both the Dow and The S&P on Wednesday halted a four-day slide. All the three major indexes finished higher on Wednesday after spending most of the session in the red following an unexpected plunge in new home sales.
The Nasdaq Composite index fell 22.85 points to 2,118.69.
For every stock on the rise nearly two fell on the New York Stock Exchange, where volume reached a little over 1 billion shares.
The dollar fell against the euro, the British pound and the Japanese yen.
Oil futures for October delivery rose 84 cents to settle at $73.36 a barrel.
Gold for December delivery fell $3.60, settling at $1,237.70 an ounce.
The yield on the 10-year Treasury note slipped to 2.50% from 2.54% late on Wednesday.
An earlier bounce lost steam as investors turned their focus to the dismal economic reports. Wall Street is now bracing for the latest reading on second-quarter GDP due early on Friday. GDP is expected to show that US the economy grew much less than previously estimated.
Economists expect the government to revise second-quarter GDP to 1.4%, a significant slowdown from the previous reading of 2.4%.
Investors were also on edge ahead of a speech early Friday by Federal Reserve Chairman Ben S. Bernanke to be delivered at the annual central bank conference in Jackson Hole, Wyo.
The Labor Department said that the number of people filing for first-time unemployment insurance eased to 473,000 last week, which was lower than forecast. The four-week moving average of claims climbed to 486,750 from 483,500 the prior week.
Adding to the bearish case, the Federal Reserve Bank of Kansas City said manufacturing growth had sputtered in the region, with its index of activity slipping to zero in August from 14 in July.
Dell said data-storage company 3PAR has accepted its $1.6 billion takeover bid, sending shares of 3PAR down nearly 3% in regular trading. But after the market close, rival HP said that it has sweetened its bid, topping Dell's earlier offer.
Shares of Toyota fell more than 1% after the automaker said it will recall more than 1 million Corolla and Corolla Matrix vehicles due to engine problems.
The Federal Aviation Administration proposed a $24 million fine against American Airlines. The airline said it will challenge the civil penalty, which would be the largest fine in FAA's history. Shares of AMR Corp., which owns American Airlines, fell nearly 1%.
European stocks closed up, as investors cheered better-than-expected US jobless-claims data and solid earnings results from French firms, including banking group Credit Agricole and cosmetics giant L'Oreal.
The Stoxx Europe 600 index gained 0.9% to 249.65, erasing the previous session's decline. The index, which spent the day in the green, enjoyed a further boost after the release of US claims for unemployment benefits for last week.
The UK's FTSE 100 index closed up 0.9% to 5,155.84, while the French CAC 40 index was up 0.7% to 3,475.03 and Germany's Dax-30 index advanced 0.2% to 5,912.58.
A slew of French companies reported encouraging results, with Accor ranking as one of the top gainers on the French index. Accor's shares rose 3.9%. The hotels group said first-half loss shrank to 64 million euros ($81 million) from €236 million in the year-earlier period. Underlying earnings more than doubled and Accor said it targets an operating profit between €370 million and €390 million in 2010.
Credit Agricole shares advanced 2.7%. France's third-largest banking group posted an 89% jump in second-quarter net profit to €379 million, helped by the performance of its domestic retail business and investment banking arm. The bank's tier 1 capital ratio, an important indicator of financial strength, widened to 9.7% from 9.2% in the year-earlier period.
Shares of L'Oreal rose 3.9%. The firm posted a 21% increase in first-half profit after European markets closed on Wednesday, with operating margin surging to a record level on stronger sales of luxury products and with management expressing confidence in the outlook for the rest of the year.
Diageo got a lukewarm reception. Shares of the owner of Smirnoff vodka and Guinness stout, among other brands, declined 1.5%. Diageo posted a 1.5% increase in annual net profit to 1.63 billion pounds ($2.53 billion) and raised its dividend by 6% to 23.5 pence a share.
Kazakhmys shares rose 5.2%. The copper miner reported an 11% increase in first-half profit as well as a 36% jump in sales.