Don't let us make imaginary evils, when you know we have so many real ones to encounter. – O Goldsmith.
Tuesday’s late recovery could well spill into today’s session, at least in early trades. Global markets didn’t witness any further damage overnight. Asian markets are mildly positive. Extrapolating the global trend, we expect a steady to higher start for Indian bourses. The advance may sustain, provided there is no fresh bad news or imaginary evils from any corner of the world.
It’s the first trading session of a new month, which means lots of new data points to absorb and analyse. Back home, we will get monthly Auto and Cement sales aside from the trade data. Globally, the markets will closely follow the manufacturing PMI figures, particularly that for China and the US. But the most awaited data is the US monthly payroll report that will be out on Friday.
Talking of data, reports suggest some discrepancies in Q1 GDP numbers. May be the Government’s statistical office could have a credible explanation. Nevertheless, India is likely to grow at upwards of 8% in FY11. The big question is whether a slowing global economy will bite off a few percentage points from the GDP.
The US is clearly slowing down and that has got the Federal Reserve worried. Last month it decided not to shrink its balance sheet by pledging to buy more debt in order to ward off the threat of a double-dip as also a possible deflation. One will have to see how the US economy behaves in the coming months.
On the other hand, there does appear to be some stability in the euro-zone though it is also not completely out of the woods. The Chinese economy is also moderating though growth there still remains fairly robust. Japan continues to be an enigma as well as a matter of concern. The BOJ has just announced further monetary easing and more is expected as a stronger yen hurts its export-centric economy.
Coming back to India, the NSE Nifty is likely to meet resistance at 5430-5450 and further along the road to 5500. The top end of the current trading range stands at 5600 but it will take continuously positive global markets and strong FII flows before we hit that milestone. Nifty support is likely to kick in at 5370-5350. But, a crack below these levels could take the index as low as 5200.
Kingfisher Airlines could be in the spotlight again as its Board has approved fund raising of up to Rs50bn. Hero Honda could remain in the limelight amid speculation that Honda is planning to exit the Indian joint venture though both the companies yesterday denied the news.
Sun Pharma is another stock to keep an eye on. The USFDA has issued a warning letter to the company for manufacturing practice violations at its Cranbury facility in New Jersey.
At the same time, the USFDA has granted its subsidiary an approval for its Abbreviated New Drug Application (ANDA) to market a generic version of Strattera, atomoxetine hydrochloride capsules. Annual sale in US for these strengths of branded and generic atomoxetine hydrochloride capsules is estimated at over US$530 million.
Telecom companies may also see some action as the Government is expected to issue 3G spectrum to the winners of the auction earlier this year. But the consumers will have to wait to enjoy high-speed internet on 3G compatible mobiles as these services are likely to see the light of day only by the end of the year.
FIIs were net buyers of Rs2.88bn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs5.95bn. In the F&O segment, the foreign funds were net buyers at Rs13.48bn. FIIs were net buyers of Rs2.73bn in the cash segment on Monday. Mutual Funds were net buyers at Rs83mn on the same day.
US stocks ended nearly unchanged on Tuesday after a listless session, as the minutes of the last FOMC meeting overshadowed a couple of encouraging economic reports.
All eyes are now on Friday's monthly jobs data, which will throw some more light on the state of the world's largest economy.
The Dow Jones Industrial Average rose 4.99 points to end at 10,014.72. The S&P 500 index finished flat at 1,049.33. The Nasdaq Composite index fell 5.94 points to 2,114.03.
Trading volumes continued to be light with many market participants on vacation. Only 1.4 billion shares changing hands at the New York Stock Exchange. Advancing issues still topped decliners by 16 to 13.
US stocks had dropped more than 1% in thin trading on Monday.
The dollar edged lower against the euro and the Japanese yen but was higher versus the British pound.
Oil futures for October delivery fell $3 to $71.70 a barrel.
Gold for December delivery gained $11.10 to $1,250.30 an ounce.
The yield on the 10-year Treasury note fell to 2.48% from 2.54% late on Monday.
Wall Street suffered its worst August performance since 2001, as concerns about the economy continued to cast a shadow on the markets. All three indexes posted monthly declines. The Dow lost about 4.3% in August, while the S&P 500 fell 4.7%, and the Nasdaq slumped 6.2% in the month.
Small-capitalization stocks, seen as leading indicator of the economy, took an even bigger hit last month. The Russell 2000 index of small-cap stocks posted its worst August performance in 12 years.
The lackluster performance in August came after stocks rallied 7% in July on strong profit growth from major US corporations. But the market is still down for the year. The Dow has lost nearly 4% so far in 2010.
US stocks were supported earlier by a larger-than-expected rise in consumer confidence and a jump in US home prices. But minutes from the last meeting of the Federal Reserve did little to dispel growing concerns on the tepid economic recovery in the US ahead of the release of the jobs data for August this week.
Minutes of the Aug. 10 Fed meeting showed that most FOMC members agreed that the new strategy of reinvesting maturing or refinanced mortgage-related securities was necessary given the weakening economic recovery.
Also, the minutes raised concerns that the central bank may not take steps to support the faltering economic recovery unless conditions deteriorate significantly.
Investors have been focused on the outlook for the US economy recently as the nation's growth has slowed. In particular, they are worried that the weak job market will continue to weigh on consumer spending - which drives the bulk of economic activity.
Friday's big employment report is expected to show that the US economy lost jobs for a third month in a row in August. Economists expect employers to have shed 120,000 jobs in August, after cutting payrolls by 131,000 in July. The unemployment rate is forecast to inch up to 9.6% from 9.5%.
Economic reports due on Wednesday morning include an index of nationwide manufacturing activity and a report on private sector job cuts in August. In addition, major automakers report August sales figures throughout the day.
The uncertainty surrounding the economic outlook and historically low trading volumes led to increased turbulence on Wall Street during August. The CBOE Market Volatility Index, or VIX, rose more than 18% in August to 26.05.
The Conference Board's index of consumer confidence rose to a reading of 53.5 in August from an adjusted 51 in July. Economists were expecting the index to come in at 50, according to consensus estimates.
The rebound in confidence numbers was attributed mostly to an improvement in how consumers view the short-term economic outlook, the Conference Board said. Meanwhile, the weak job market continues to darken their long-term view.
Separately, the Chicago PMI, a regional reading on manufacturing activity, fell to 56.7 in August. That's down from 62.3 in July and slightly weaker than expected. Economists were looking for 57 in August.
Before the market opened, a report showed that national home prices jumped a substantial 3.6% in the past year, versus a forecasted 3.1% gain. The S&P/Case-Shiller Home Price Index also showed that prices climbed 4.4% in the second quarter, compared with a 2.8% plunge in the first quarter.
Technology stocks took a hit after technology researcher Gartner cut its 2010 projection for world-wide PC shipments, saying that the second half won't be a strong as it previously expected.
Luxury-fashion retailer Saks jumped nearly 20%. Saks' climb was fueled by speculation that a private-equity consortium is preparing a cash bid of $1.7 billion, or $11 a share, for the retailer, according to a newspaper. A Saks spokeswoman refused to comment on the report.
Biotech agribusiness company Monsanto dropped 5.8% after predicting its fiscal-year earnings will come in at the low end of its prior view.
European stocks erased intra-day losses to finish higher after consumer confidence in the US increased and home prices rose better than estimated, assuaging some concerns over the health of the world's largest economy.
The Stoxx Europe 600 index finished up 0.1% at 251.31 points, rebounding from an intraday low of 247.82. The index has dropped 1.6% this month.
The UK's benchmark FTSE 100 index closed up 0.5% to 5,225.22. The French CAC 40 index gained 0.1% to 3,490.79 and Germany's DAX 30 climbed 0.2% to 5,925.22.
European stocks had traded lower for most of the session after Tokyo's Nikkei Stock Average dropped 3.6% on continued worries about the strength of the yen.
Shares of French retailer Carrefour had a see-saw session, losing 0.8%, having earlier gained as much as 2% after the retailer said that it swung to a profit in the first half of the year.
Hermes International dropped 2.7% after reporting its first-half results.