No rhyme or reason

If you follow reason far enough it always leads to conclusions that are contrary to reason.- Samuel Butler.

We are staring at a sluggish start; no great reason for the same though. Investors could still be feeling jittery after Friday’s big crash that was blamed partly on bleak IIP data and partly on a steep fall in China.



In terms of major news, Telecom Minister A Raja has finally resigned in connection with the much reported impropriety in the allocation of 2G licences. October’s inflation data will be out today.

Most world markets had a pretty bad week. Whether it brings about a rebound or fresh selling is now the question. No clear answers as we have to take each day as it comes and adopt a measured approach till the fog lifts on the near term direction of the market.

Chinese market is choppy while stocks in Japan are up on better than expected GDP report. The Kospi is in the green while the rest of the regional markets are in the red. US stocks closed down on Friday as did the European indices.

Technically, the price behavior on daily charts isn’t encouraging. The formation of a Broadening Top raises fears of extended correction which would be activated if the Nifty moves below 5930. One needs to exercise caution in the coming days unless we see negation of such pattern by a convincing close above 6200.

Tata Steel, IOC, RCOM, Reliance Capital and Kingfisher Airlines will be in focus after announcing their results over the weekend. ABG Shipyard, Satyam Computer, SpiceJet and Shree Renuka Sugar are among the few influential companies declaring results today.

Power Grid is another stock to watch out for after its FPO received an overwhelming response. Now all eyes could be on Hindustan Copper, SCI and SAIL ahead of their public issues in the coming weeks.

Globally, Ireland has denied reports that it is considering tapping into the EU-IMF bailout funds. The Irish government says that it is confident of surviving without any assistance.

Japan's GDP grew 0.9% in the July-September quarter, surpassing forecasts and marking the fourth straight quarter of growth. But analysts warn of a potential slowdown ahead.

Fund flows improved after the Federal Reserve spelled out its goals for a new round of quantitative easing or the so-called QE2 on Nov. 4, says EPFR Global. During the week ending Nov. 10 investors committed over $15 billion to EPFR Global-tracked equity funds, the highest weekly total since late Q2 2008, and another $7.1 billion into Money Market Funds.

Flows into US Equity Funds were strong while Europe Equity Funds posted their seventh straight week of net inflows, says the US-based global tracker of fund flows. Meanwhile, Commodity Sector Funds hit a 26-week high as the prices of gold and other commodities climbed.

Global Equity Funds had their best week since early April and flows into Emerging Market Equity Funds are on the verge of setting an all-time annual inflow record.

FIIs were net sellers of Rs 7.82bn in the cash segment on Friday (provisionally), according to the NSE web site. Local funds were net buyers of Rs 2.45bn. In the F&O segment, the foreign funds were net sellers at Rs 3.2bn. The foreign funds were net buyers of just Rs 1.1bn in the cash segment on Thursday, as per the SEBI web site.

Asian Markets on Monday:

Asian markets are largely down but stocks in Tokyo are up on the back of a better than expected third quarter GDP data. AXA Asia Pacific shares surged after AMP and Axa SA offered at least A$13.3 billion in a new bid.

Anglo-Australian mining giant BHP Billiton has formally ended its attempt to take over Potash and will buy back shares instead.

Brambles Ltd., the world’s biggest supplier of wooden pallets, jumped 6% in Sydney after bidding 696 million euros ($954 million) for IFCO Systems NV.

The MSCI Asia Pacific Index climbed after its worst weekly loss since August last week. It was up 0.3% at 132.46 as of 11 a.m. in Tokyo, with about seven stocks advancing for every six that fell.

The Nikkei 225 Average in Tokyo was up 0.7% at 9,794 while the S&P/ASX 200 Index in Australia was up about 0.4% at 4,709. The Hang Seng in Hong Kong was marginally higher at 24,232. The Shanghai Composite index in China shed ~1% at 2,956.

South Korea’s Kospi Index was up 0.1% at 1,915 while the Taiex in Taiwan was down 0.7% at 8,253 while the Straits Times index in Singapore slipped 0.4% at 3,238.

Japan’s economy grew at a faster pace in the third quarter, as consumer spending increased, partly offsetting the adverse impact from a stronger yen and export slowdown.

The GDP rose at an annualized pace of 3.9% in the three months ended Sept. 30, following a revised 1.8% expansion in the previous quarter, the Cabinet Office said in Tokyo today. The median forecast of economists was for a 2.5% increase.

BHP shares rose after the company said it will buy $4.2 billion shares under a $13 billion buyback program it suspended in 2007. The Melbourne-based company said today in a statement that it had scrapped its $40 billion takeover of Potash Corp. of Saskatchewan Inc. after saying that the bid couldn’t meet the Canadian government’s requirements.

OneSteel Ltd. shares climbed in Sydney. Australia’s second-largest producer of the metal said it will pay $932 million for Anglo American Plc’s Moly-Cop and AltaSteel units as the owner of some of the world’s biggest diamond and platinum mines sheds assets.

Takeda Pharmaceutical Co. shares dropped. Spokeswoman Mihoko Shinomiya declined to comment on a report that said it had started talks with Genzyme Corp. to buy the US drugmaker for more than $18.5 billion.

US Markets on Friday:

US stocks closed sharply lower on Friday, capping their worst week in three months, as investors reduced risky bets amid speculation about a fresh round of monetary tightening in China and due to the simmering sovereign debt issues in the eurozone.

Commodities too took a beating amid worries that further rate increases in China could hurt the global demand for everything from metals to crude oil.

But, bond prices in Ireland and Portugal rose and the euro pared its weekly losses amid signs that the EU will eventually bailout Ireland and after the G-20 members said they would soon put in place a mechanism to reduce the crippling global economic imbalances.

The Dow Jones Industrial Average fell 90.52 points, or 0.8%, to 11,102.58, its lowest level since Nov. 2, the day of the US congressional midterm elections.

The Nasdaq Composite Index fell 37.31 points, or 1.5%, to 2,518.21. The Nasdaq shed 2.4% this week, snapping a string of five consecutive up weeks.

The S&P 500 Index shed 14.33, or 1.2%, to 1,199.21 on Friday, also breaking a five-week streak of gains.

The Dow and the S&P fell 2.2% each.

All three major indexes logged their biggest weekly drops in three months.

Materials led the S&P 500’s decline amid worries that global resources demand could moderate if China, a big user of raw materials, slows its economy.

Asian markets tumbled and European markets closed lower amid concerns that the Chinese government would further tighten monetary policy to counter inflation in a rapidly expanding economy.

The benchmark Shanghai Composite Index fell 5.2%, its biggest drop in 14 months. The Hang Seng in Hong Kong dropped 1.9% and Japan's Nikkei ticked down 1.4%.

European stocks ended mixed amid worries of the eurozone's fiscal crisis. Britain's FTSE 100 edged lower by 0.3%, while the DAX in Germany edged up 0.2%. France's CAC 40 declined 0.9%.

The US dollar weakened against the euro and traded at $1.3691, up from $1.3659 late on Thursday in New York.

Demand for Treasurys declined, sending the 10-year note’s yield up to 2.79%. The Treasury market was closed Thursday for the Veteran's Day holiday.

Crude-oil prices slid 3.3%, their largest one-day decline in nearly a month.

Gold futures fell 2.7% on Friday, the biggest one-day drop since July 1.

G-20 leaders wrapped up their meeting in Seoul, South Korea, without any comprehensive plan to combat global economic imbalances. But they did agree to address persistently large imbalances next year.

Currency was a hot topic at the G-20 summit, and the leaders declared at the close of the meeting an effort to refrain from competitive devaluation of currencies.

The University of Michigan Index of consumer sentiment for early November rose to 69.3 from 67.7. Economists were expecting the reading to rise slightly to 69.0.

Before the opening bell, retailer JC Penney reported third-quarter earnings of 19 cents per share on $44 million in net income, topping analyst expectations.

The jump in net income represents a 63% increase year-over-year for the company. JC Penney said that it expects strong sales heading into the crucial holiday shopping season. Shares of JC Penney fell 3.4%.

Walt Disney Company's results were unexpectedly released about 30 minutes before the market closed on Thursday. The company said that profits fell in the third quarter, missing analysts estimates. Its shares rose 5.1%.

Northrop Grumman said that it would reduce its workforce by 380 salaried employees at its Newport News, Va., shipbuilding facility. The reductions are effective immediately. The stock slipped 1.8%.

Shares of Intel rose 1.5% after the chipmaker said it is increasing its quarterly cash dividend 15% to 18 cents per share, which will be paid during the first quarter of 2011.

Nvidia Corp. jumped 5.2% after beating third-quarter profit estimates by a penny and offered an upbeat sales outlook on Thursday.

Dillard’s surged 9.7% after its fiscal third-quarter earnings soared 80% as the department store operator on stronger margins, modestly lower sales and lower expenses.

Chief Executive William T. Dillard II said that the solid performance reflected efforts to effectively manage inventory and control expenses.

European Markets on Friday:

European stocks ended lower after fresh worries over further monetary tightening in China sent shares tumbling in Shanghai, but bank stocks bounced back after regional leaders sought to assuage concerns about the ongoing fiscal problems in peripheral eurozone nations.

The Stoxx Europe 600 index dropped 0.4% to settle at 270.18, with mining stocks leading the decline. The fears about further tightening in China sparked a drop in commodity prices.

The pan-European index, however, recovered from losing as much as 1.8% earlier in the session as European leaders tried to sooth sovereign debt holders, saying that any mechanism to impose losses on bondholders would only apply to debt issued after mid-2013.

The French CAC 40 index fell 0.9% to close at 3,831.2, while the UK’s FTSE 100 index shed 0.3% to end at 5,796.87. But the German DAX 30 index gained 0.2% to finish at 6,734.61. Portugal’s PSI 20 index rose 0.5% and the Irish ISEQ index added 0.3%.

The cost of insuring Irish government debt against default fell after repeatedly hitting fresh highs in recent days.

In a joint statement, the finance ministers of France, Germany, Italy, Spain and the UK said that there would be no impact whatsoever on existing sovereign bondholders if a new crisis-resolution process were introduced for struggling countries.

Irish Finance Minister Brian Lenihan, meanwhile, denied rumors that Dublin was set to ask for a bailout.

Bank stocks turned mostly higher.