Coming to terms…

The dollar is being pummeled due to a sluggish US economy and expectations of fresh Quantitative Easing by the Fed. Commodities are on fire. Gold is at record high. Copper is at a two-year high. Crude oil is hovering around $83 per barrel. Silver and Tin too are shining.

One's first step in wisdom is to question everything - and one's last is to come to terms with everything. – Lichtenberg.



When newly listed stocks move 100% higher in a day, one begins to question the wisdom of many. Today’s start may be slightly lower to flat. Wall Street closed mixed. European stocks have gained while Asia is indecisive. Large-cap stocks may not move much while some side counters may continue to climb. Nifty needs to sustain above 6230 before heading towards 6350.

The dollar is being pummeled due to a sluggish US economy and expectations of fresh Quantitative Easing by the Fed. Commodities are on fire. Gold is at record high. Copper is at a two-year high. Crude oil is hovering around $83 per barrel. Silver and Tin too are shining.

High-yielding currencies and the euro are also up smartly at the expense of the dollar. In fact, a war of words has erupted on the sensitive issue of currency with the US and China at the forefront. Japan is struggling to rein in yen’s advance despite first intervention in six years and monetary easing steps.

The rupee too has rallied to a five-month peak. It may gain further if FII inflows continue unabated. The IMF has raised India’s GDP growth forecast for 2010 to 9.7%. The focus will shift to earnings soon but before that one will have to contend with the US jobs data due on Friday. Two private reports show persistent weakness in the US labour market.

The Nifty has strong support at 6130-6100 and below that at 6000. On the way up, it will meet resistance at 6250 before it heads north towards its all-time high of 6357. The short-term trend continues to be positive unless the aforesaid support levels are breached decisively. Market breadth has been positive in the past few sessions, which is encouraging.

The FIIs were net buyers of Rs18.42bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs9.76bn. In the F&O segment, the foreign funds were net sellers at Rs2.84bn. The FIIs were net buyers of Rs9.7bn in the cash segment on Tuesday, as per the SEBI web site. Mutual Funds were net sellers at Rs3.25bn on the same day.

In the US, Treasury yields sank and the USD-Yen returned to 15 year low at 82.98 and its 8.5 month low against other major currencies. The dollar index dipped to 77.386. Private American employers cut 39,000 jobs in September, the largest loss since January, versus a forecast of adding 24,000 jobs.

The IMF has cautioned on the fragility of the global recovery and Goldman Sachs says that the US economic outlook over the next six to nine months is very bad.

Fitch has cut Irish credit rating to A+ from AA- and Moody's has placed Allied Irish Bank and Bank of Ireland long-term credit on review for possible downgrade.

SUPPORT & RESISTANCE LE