New highs, time to let go!

Some people think it's holding on that makes one strong- sometimes it's letting go. – Anonymous.

A strong show by IT majors ensured the bulls had a good day in office. But market breadth was neutral and volume once again tepid. Yes, we might just see the Nifty piercing 5500 today. But the big question is can the market sustain the advance?



Possibilities abound in the near term as we grapple with a timid global recovery and high inflation back home. The good news for India is that FII inflows are strong. Monsoon has been good. Risk appetite is high among global investors. Also, the Government appears to be taking baby steps towards key reforms.

Central banks in the UK and EU will take up interest rate review today. Friday’s US jobs report will be important too. Currency movements have turned rather volatile. Crude oil has climbed to $82 a barrel. Gold is hovering around $1,200.

We see a flat to slightly higher start. Key indices may accelerate as the day wears on, provided global cues are supportive. Take a pause and decide which stocks are worth holding on to and which you can happily let go.

Select stocks and sectors are driving the proceedings on local bourses as investors seek better returns amid rich valuations in large caps. The broad range for the Nifty remains in tact at 5300-5600. Any rise from hereon will meet with periodic resistance along the way. Near-term support exists at 5420-5430 levels.

As far as global markets are concerned, US stocks gained after encouraging reports on service sector growth and private hiring. European shares followed Wall Street up as well. But Asian markets are mixed this morning with China down marginally and Japan up.

Results Today: Anant Raj Industries, Ansal Housing, Aurobindo Pharma, Dredging Corp., Essar Shipping, Man Infra, Oracle Financial, Varun Shipping and Zenotech Labs.

FIIs were net buyers of Rs6.88bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs2.75bn. In the F&O segment, they were net buyers at Rs5.91bn. On Tuesday, the FIIs were net buyers of Rs6.77bn in the cash segment. Mutual Funds were net buyers at Rs273mn on the same day.

US stocks closed up on Wednesday, reversing the previous session's losses, as investors welcomed a better-than-anticipated reading on the service sector and improvement in private sector job addition.

The Dow Jones Industrial Average finished up 44.05 points, or 0.4%, at 10680.43. The blue-chip index has already gained 2% this month and is close to a three-month high.

The Nasdaq Composite rose 0.9% to 2303.57, while the Standard & Poor's 500 stock index added 0.6% to 1127.23, with consumer discretionary and health-care stocks leading the way.

The US dollar regained 0.5% on the yen. The euro fell back against the dollar as the latest euro-zone data disappointed growth prospects and lowered inflation expectations, trading recently at $1.3163, down from $1.3231 late Tuesday in New York.

The Dollar Index, which tracks the greenback against six other currencies, was up 0.4%, breaking a five-day losing streak.

Gold futures broke above $1,200 an ounce before slipping to $1193.70, buoyed by strong investment demand and news that China has liberalized its domestic gold market. Copper was also strong, adding 1.4%.

US light crude oil for September delivery fell 11 cents to $82.44 a barrel.

Treasury prices eased, pushing the yield on the 10-year note up to 2.95% from 2.91% late on Tuesday.

Investors have become increasingly focused on the outlook for economic growth. Traders are worried that a weak jobs market will undermine consumer confidence and hurt the already faltering recovery.

A monthly job survey showed private-sector payrolls adding a better-than-expected 42,000 jobs in July, fueled by hiring at small- and medium-sized businesses. Economists had been expecting the ADP report to show a 25,000 increase in July. This followed an upwardly revised 19,000 increase in June.

Separately, outplacement firm Challenger, Gray & Christmas said planned job cuts rose for a third straight month in July, fueled by continued weakness in the government and non-profit sector.

The data offered some relief ahead of Friday's release of the Bureau of Labor Statistics' non-farm payroll data, which includes government workers.

The government will report weekly initial claims data before the market opens on Thursday. The retail sector will also be in focus when the nation's top chain stores report same-store-sales figures for July.

Meanwhile, the Institute for Supply Management's services sector index rose slightly in July, marking the seventh consecutive month of growth in the sector. The ISM services index increased to 54.3 last month from 53.8 in June. A reading above 50 indicates growth. Economists had expected the index to fall to 53.

US stocks had closed lower on Tuesday, paring some of the previous session's big gains, as disappointing reports on housing and consumer spending raised concerns about the strength of the economic recovery.

Intel said it has agreed to settle antitrust charges levied by the Federal Trade Commission without paying a fine, though the chipmaker did agree to refrain from some activities designed to force its competition out of the market.

Intel was accused of refusing to sell chips to some computer manufacturers that also bought chips from rival companies and paying other manufacturers rebates in exchange for promises not to use microchips manufactured by Intel's competitors.

BP said that the Gulf of Mexico Macondo well "appears to have reached a static condition - a significant milestone," as a result of a procedure carried out on Tuesday. Shares eased 1.5%.

Toyota Motor said that it swung to a profit in its latest quarter and boosted its full-year sales outlook. Shares rose more than 1%.

Priceline.com surged to a 10-year high after its quarterly earnings jumped 72%, easily topping Wall Street forecasts. Goldman Sachs raised its target price on the stock, calling Priceline.com one of the best growth stories on the Internet.

Home builder PulteGroup pared intraday gains to slip 0.5% after reporting strong quarterly profits and revenues as home buyers took advantage of federal home-buyer tax credits, though with their expiry on April 30 the outlook for the housing market has gotten bleaker.

Barnes & Noble shares jumped after putting itself up for sale Tuesday, succumbing to mounting pressure from shareholder activists concerned about how digital books are eroding the traditional business of the nation's largest book-store chain.

Walgreen shares fell after same-store sales for July fell short of analysts' expectations, though that figure gained for a second straight month on improved customer traffic and basket size.

Time Warner shares inched up after second-quarter profits beat analysts' estimates. CBS rose 4.1% after reporting soaring second-quarter profits and revenue gains across its portfolio of media assets.

European shares posted modest gains as US data helped alleviate worries about economic growth and offset losses in the banking sector. After trading with losses for much of the session, the Stoxx Europe 600 index ended up 0.04% to 262.17.

Germany's DAX index gained 0.4% to 6,331.33 points. Adidas shares edged up after the firm's second-quarter net profit soared to €126 million, from €9 million in the same period a year ago, and it increased its full-year outlook.

France's CAC-40 index rose 0.4% to 3,760.72. Shares of banking group Societe Generale gained as its second-quarter net profit more than tripled to €1.08 billion.

The UK's FTSE 100 index fell 0.2% to 5,386.16, led lower by the retail sector.

Shares of clothing and home-ware retailer Next dropped after it said that there has been a "noticeable cooling" in retail demand and consumers remain cautious although it expects fiscal-year pre-tax profit to meet guidance.

Shares of banking group Standard Chartered dropped 5.2%, even as its first-half net profit rose 11% to $2.15 billion.

Shares of Lloyds Banking Group advanced 3.6% after its earnings topped expectations.

In Milan, shares of UniCredit SpA declined after its second-quarter net profit tumbled 70% to €148 million.

Shares of Allied Irish Banks dropped 5.1% in London trading after its first-half net loss widened to 1.7 billion euros ($2.25 billion).