For safety is not a gadget but a state of mind. ~ Eleanor Everet.
With the Nifty continuing to attempt a jump over the 5550 mark, market participants - large and small - are getting uncomfortable. Besides the swings associated with the F&O expiry and the usual global cues, there appears no strong catalyst in sight to either break or make the market. After a flat finish we are staring at slightly soft opening today.
Asian markets are mostly down following the overnight decline in US shares. Wall Street was hurt by lingering worries about the health of the US economy. All eyes are on today’s housing data, which is expected to be rather grim. Investors will also look forward to Friday’s revised US GDP data. Across the Atlantic, markets in Europe closed up though Germany’s benchmark ended nearly unchanged.
Coming back to India, non-index counters have been buzzing lately. That trend is likely to continue but exercise caution on these counters. Large caps could see some action based on the news-flow. While the overall bias for the Indian market remains positive, don’t expect great things in the near term. Have some patience and you are bound to reap a rich harvest in the coming months. Thursday’s F&O expiry could throw some more light on near-term direction.
Global markets are witnessing some amount of volatility owing to concerns about slowing growth in the US and elsewhere. But Indian markets are more or less stable. Volatility has been low and trading volume has picked up. Fund flows remain encouraging although local institutions continue to cautious. Some resistance is expected before the Nifty hits 5600. Support is likely to kick in at around 5400 if the Nifty slips below 5500. The Nifty might go on to hit 5700 in the near term but not without hiccups.
FIIs were net buyers of Rs3.18bn in the cash segment on Monday (provisionally), according to the NSE web site. Local funds were net sellers of Rs1.59bn. In the F&O segment, they were net buyers at Rs17.02bn.
Year-to-date flows into EPFR Global-tracked bond funds moved over the $270bn mark during the week ended August 18, according to EPFR Global. Collective outflows from equity funds hit a six week high, with Emerging Market Equity Funds the only group to buck this trend. Redemptions from US Equity Funds exceeded $7bn, investors pulled another $880mn out of Europe Equity Funds and Japan Equity Funds posted outflows for the 13th time in the past 15 weeks.
Flows into Emerging Markets Bond Funds fell to an 11-week low and High Yield Bond Funds had their worst week since early July. Nonetheless, Emerging Market Bond Funds extended their YTD record inflows to $32.8bn, which trounces the previous full-year record inflow of $9.7bn set in 2005. Overall, investors pulled $7.49bn out of Equity Funds during the week and committed a net $4.2bn to their Bond Fund counterparts.
US stocks closed lower on Monday after a choppy day of trading, as persistent worries about the economy overshadowed initial optimism fueled by M&A deals. This was the third straight day of losses for US stocks.
The Dow Jones Industrial Average finished down 39.21 points, or 0.4%, at 10,174.41, after gaining as much as 91 points intraday. The Nasdaq Composite Index slipped 0.92% to 2,159.63 while the Standard & Poor's 500-stock index fell 0.4% to 1067.36.
The euro fell to $1.2662 while the US Dollar Index, which tracks the US currency against a basket of six others, edged up 0.1%. Treasurys rose, pushing the yield on the 10-year note down to 2.61%, while crude oil futures tumbled to around $73 per barrel and gold futures were off slightly.
Monday's stock-market movements came on one of the thinnest days for trading volume this year, with just over 3.3 billion shares changing hands in NYSE Composite volume. The only two weaker trading days have come on the two previous Mondays.
Market breadth was negative.
Wall Street is awaiting a few key economic reports later in the week, including on the housing market as well as a revision to second-quarter GDP growth. Economists are expecting the government's estimate of 2.4% GDP growth for the second quarter to be cut to 1.2% when it is released Friday. Last week, investors were hit with a slew of dismal indicators.
The latest economic data from the euro zone was less than encouraging. Both the region's manufacturing and services purchasing managers indexes (PMI) slid in August, despite pickups in Germany and France.
Meanwhile, a report from Moody's Investors Service warned that growth throughout the euro zone may fall short of preventing credit-rating agencies from downgrading some member countries if their economies begin to suffer in the face of tight austerity budgets.
3Par shares surged 45% after H-P made a $1.6 billion offer for the data-storage company that is one-third higher than what rival Dell agreed last week to pay for 3PAR. H-P shares declined 2% while those of Dell slipped 1.1%.
Potash Corp. of Saskatchewan added 0.4% in New York trading. The fertilizer company's Chief Executive Bill Doyle said it has received "exceptional" interest from a broad range of companies and the price offered by potential bidders will be the most important factor in deciding whether Potash should sell itself.
The company's board of directors told shareholders to reject a hostile takeover bid of $38 billion from mining company BHP Billiton, saying that "superior offers or other alternatives are expected to emerge."
US shares of HSBC, Europe's largest bank, edged up 0.3%. The company proposed a deal to buy majority control of South African lender Nedbank Group.
The Gulf Coast Claims Facility, led by Kenneth Feinberg, will take over the BP oil spill claims process. The claims will be paid using the $20 billion escrow account established by BP. Shares of the oil company dipped less than 1%.
European stocks ended higher, as miners gained on relief over Australia's elections and financials advanced on deal news involving HSBC and Old Mutual. The Stoxx Europe 600 index added 0.6% to 253.76.
The UK's FTSE 100 index closed 0.8% higher to 5,234.84 and the French CAC-40 index rose 0.8% to 3,553.23. The German DAX index inched 0.1% higher to 6,010.91.
Financial stocks were top gainers, buoyed by M&A news.
Shares of Old Mutual rose after HSBC said it's in talks to acquire a majority stake in Nedbank Group, which is owned by the insurer. Shares of HSBC also advanced.
Mining shares gained after some relief over Australia's weekend election, which failed to produce a clear winner. The sector had risen in recent days on hopes that a planned tax on mining profits would be suspended if the conservative party wins.
Meanwhile, Potash Corp. urged its shareholders to reject BHP Billiton's nearly $40 billion hostile bid for the firm. The Canadian potash producer also said it's in talks with third parties about a possible alternative.
SABMiller was in focus after the Sunday Times of London said that the company may spend up to $10.9 billion to acquire the beer operations of Foster's Group Ltd., the largest brewer in Australia.