There are two ways of exerting one's strength: one is pushing down, the other is pulling up – BT Washington.
The bulls and bears seem to be pushing and pulling each other but in a narrow range. The Indian market failed to capitalize on a bright start to August as results proved to be less inspiring and worries mounted over a faltering US recovery. Friday’s much-awaited US jobs report have only added to the external risks. But, the fact that Wall Street did not suffer too much damage could help the bulls stage a recovery. Asian markets too seem to have taken the US jobs data in stride. Most of them are flat to slightly positive. So, the start will be a little sluggish but the finish might be better, provided world equities cooperate.
Apart from the global risks, sentiment is also getting affected by unfavourable risk-reward ratio and ‘rich’ valuations. Still, FII inflows remain fairly strong and will continue to support the market in case of a correction. The latest IIP data will be out on Thursday. Before that Tuesday’s Fed meet, coupled with a whole host of data from China and Europe may grab markets’ attention.
Results Today: BF Utilities, Britannia, Diamond Power, Electrosteel Castings, Finolex Cables, Gayatri Projects, Goodyear India, Harrisons Malayalam, Jain Irrigation, Monnet Ispat, Opto Circuits, Reliance Capital, SREI Infra, Time Technoplast and Tulip Telecom.
FIIs were net buyers of Rs6.64bn in the cash segment on Friday (provisionally), according to the NSE web site. Local funds were net sellers of Rs3.4bn. In the F&O segment, they were net sellers at Rs3.12bn. Foreign funds were net buyers of Rs1.67bn in the cash segment on Thursday, according to SEBI's web site. Mutual Funds were net sellers at Rs1.86bn on the same day.
US stocks staged a smart recovery on Friday to close well off their session lows despite a weak jobs report that failed to assuage worries about the strength of the economic recovery.
The Dow Jones Industrial Average fell 21 points, or 0.2% to end at 10,653.56, while the S&P 500 index dropped 4 points, or 0.4% to finish at 1,121.64, hovering around its 200-day moving average after falling below it earlier in the day.
The Nasdaq Composite index lost 4 points, or 0.4% to close at 2,288.47.
A Labour Department showed that the US economy shed jobs for the second consecutive month in July following five consecutive months of gains, as the government continued to relieve Census workers.
Private employers continued to hire but at a sluggish pace, adding to recent concerns about the US economic recovery and putting pressure on the Federal Reserve to take more steps to boost growth.
Selling accelerated as stocks fell through key technical levels, with the Dow shedding 160 points in the morning. But the market recovered late in the day to close near session highs.
All three US indexes ended the week higher. The Dow and the S&P both rose 1.8% over the last five days, while the Nasdaq gained 1.5%.
Still, investors remain wary about how the weak job numbers will influence the Federal Reserve's decision at Tuesday's meeting. Investors are particularly worried that consumer spending, the main engine powering the US economy, will suffer as unemployment remains high.
The Fed policymakers are widely expected to hold interest rates steady. But some experts see the Fed signaling more aggressive plans to support a sluggish US economy.
Better-than-expected corporate earnings had helped boost the US stocks in July, which was the best month for Wall Street in a year. But the murky outlook for the US economy has weighed on the market in August.
Treasurys surged after the release of the downbeat jobs data, pushing the yield on the 10-year note to its lowest level in more than a year. The 10-year yield closed down at 2.824%, hitting its lowest level since April 2009. The two-year note's yield dropped below 0.5% for the first time ever, but then pared some of those losses to trade at 0.52% later in the day.
The dollar hit its 2010 low against the yen and weakened against the euro. After piercing $1.33 to a three-month high, the euro was trading recently around $1.3290, up from $1.3186 late on Thursday in New York.
The Dollar Index, which tracks the US currency against a basket of six others, shed 0.6%.
Gold prices rose above the $1,200 psychological benchmark as investors rushed to the safety of the precious metal.
US light crude oil for September delivery fell $1.16 to settle at $80.85 a barrel.
Trading volume were once again light, with 3.1 billion shares changing hands in New York Stock Exchange.
Also weighing on the sentiment was a decline in consumer credit amid increased saving by American households. Consumer credit outstanding fell 0.7% in June, while the national savings rate rose to 6.4% from 6.3% in May, the Federal Reserve said in a report late on Friday.
Cyclical stocks declined, while defensive shares in health-care, utilities and consumer staples helped limit the damage.
In corporate action, AIG shares rose as the company's insurance business generated an operating profit, though the bailed-out insurance behemoth swung to a second-quarter loss after taking a $3.3 billion write-down on the operations set to be sold to MetLife.
Kraft Foods shares gained after reporting a 13% jump in its second-quarter profit as its new Cadbury business helped drive sales in developing markets in Asia and Latin America. Earnings topped Wall Street's expectations and Kraft affirmed its 2010 earnings outlook.
Fannie Mae said it lost $1.2 billion in the second quarter, down significantly from an $11.5 billion loss in the prior quarter. The government-run mortgage finance company said that its financial condition has vastly improved over previous quarters, but it still requested more government assistance.
European markets closed lower on Friday as the disappointing US jobs data offset encouraging earnings from regional players.
The Europe Stoxx 600 index closed down 1.1% after trading as high as 263.42 early in the session.
German DAX index fell 1.2% to 6,259.63 while in France, the CAC-40 index ended down 1.3% to 3,716.05. The UK's FTSE 100 index fell 0.6% to 5,332.39.
Regional economic data showed that Italy's GDP rose 0.4% in the second quarter, with the growth rate unchanged from the first quarter.
The Bank of Spain estimated that the Spanish economy expanded by 0.2% in the quarter, up from 0.1% in the first quarter.
German industrial production declined 0.6% in June, paring year-to-date growth to 10.9%.
BP shares rose after the UK company said late on Thursday that it has completed cementing operations at the Macondo well in the Gulf of Mexico. The operations form part of its effort to stem oil from leaking into the Gulf.
Shares of German specialty chemicals group Lanxess rose after its second-quarter net profit soared to €131 million from €17 million in the same period a year ago and it raised its earnings outlook.
Heineken and Anheuser Busch-InBev shares fell after wheat futures touched a fresh 23-month high on the Chicago Board of Trade. Wheat futures rallied this week after Russia imposed a temporary ban on its grain exports amid a severe drought.
Brazil stocks fell and Mexican shares just managed to avoid losses following the weak US monthly jobs report.
Brazil's Bovespa index closed down 0.4% at 68,094.76. Mexico's IPC eked out a gain of 11 points to end at 32,917.92, managing to pare deeper losses.
Chile's IPSA ended up 0.5% at 4,462.82, a record high. It closed the week with a 2.3% gain. Argentina's Merval fell 0.3% to 2,425.33, but ended the week higher by 1.3%.