Shaky start…select buying likely

We are inclined to believe those whom we do not know because they have never deceived us. - Samuel Johnson.

The bulls may be ‘down’ but whether they are ‘out’ only the coming days will tell. The market may recover some lost ground after the selloff in the past few sessions. The start today appears to be shaky and sluggish. Global cues are indecisive with European markets rising and Asian benchmarks in red. US markets were shut on Thursday on account of Thanksgiving holiday.



Traders and investors alike will remain jittery in the wake of the bribe-for-loan scam. Stocks of the realty firms, select NBFCs and a few banks could remain under pressure as would shares of companies named by the CBI. But the fact that authorities are taking stern action should offer some comfort from a longer term perspective.

The time is right to pick up fundamentally sound stocks which may have got beaten down along with their peers.

Globally, concerns prevail on the mounting fiscal woes of indebted eurozone nations as well as on China’s efforts to cool the economy. Geopolitical tension is also a near-term risk. The US markets will be open today for half a day owing to Black Friday. Keep an eye on indicators and media reports on US retail sales over the Thanksgiving weekend.

The Nifty failed to move beyond 5970 and finally closed near 5850 levels. Today we expect markets to remain volatile with levels of 5925 acting as an intermediate resistance. Support is likely to kick in at around 5750-5730. There is a possibility of the Nifty falling below 5700 and going as low as 5500. On the way up, the Nifty could face resistance at 5870 and 5950. Without doubt, 6000 will be a critical level to watch. The best way to ride the current wave of uncertainty is to stay light and not be adventurous.

FIIs were net sellers of Rs 12.08bn in the cash segment on Thursday while Mutual Funds were net buyers of just Rs 1.98bn, according to the NSE Web site. FIIs were net sellers at Rs 12.64bn in the F&O segment yesterday. The foreign funds were net buyers of Rs 17.75bn in the cash segment on Wednesday, as per the SEBI web site. Mutual Funds were net sellers at Rs 4.53bn in the cash segment on the same day.

The IPO of MOIL opens today. The government on Tuesday fixed a price band of Rs 340-375 a share for raising up to Rs 1,238 crore through initial sale of shares in Manganese Ore India Ltd , which will become the fifth state-run company to see divestment this fiscal.

The Centre will dilute 10% stake in the country's largest manganese manufacturer, while Madhya Pradesh and Maharashtra governments will shed 5% each through the public offer that will open on November 26 and close on December one.

The issue would raise a total of Rs 1,238 crore at the upper end of the price band, including 5% discount to retail investors and MOIL employees.

WPI inflation, especially food inflation, has moderated lately. But, the untimely showers has indeed done some damage to the harvested kharif crops in many critical parts of the country, potentially pushing up food prices.

Asian Markets on Wednesday:

Asian markets are trading mixed to subdued with benchmarks in Japan and Australia just in the green while the indices in China and Hong Kong are down marginally.

The lackluster performance in Asia this morning could be attributed to the trading holiday on Wall Street on Thursday on account of Thanksgiving.

Mining companies rose after German central bank President Axel Weber said that a rescue fund for the euro area would be sufficient to calm financial markets.

South Korea’s stocks fell after the country’s defense minister quit in response to shelling from North Korea.

The MSCI Asia Pacific Index dropped 0.2% to 130.31 as of 10:29 a.m. in Tokyo, with seven stocks dropping for every five that advanced.

On Wednesday, the regional index touched the lowest level for the month and the won slumped while the dollar touched a two-month high against the euro following the hostility on the Korean peninsula and mounting concerns about the European debt problems.

It is headed for its third straight weekly decline, and is down 3.5% from a two-year high on Nov. 8 through Thursday.

The Nikkei in Tokyo was up 0.1% at 10,088 while the S&P/ASX 200 index in Sydney rose 0.2% to 4,602. The Hang Seng in Hong Kong was down nearly 0.1% at 23,031. The Shanghai Composite index in China fell 0.8% at 2,875.

South Korea’s Kospi Index fell ~0.7% at 1,914 after being as low as 1,912. The Taiex in Taiwan was just in red at 8,347 while the Straits Times index in Singapore was up ~0.2% at 3,154.

South Korea’s won dropped the most in five months against the dollar on Wednesday after North Korea fired artillery shells at an island near the border with South Korea. Tuesday’s shelling was the worst attack by North Korea on its neighbor in at least eight months.

Global markets have also been worried of late about China’s attempts to slow the economy and control inflation, weighing on commodity demand.

Asian stocks were also hit by speculation that Europe’s sovereign-debt crisis may spread after Moody’s warned that a bailout of Ireland may pose a "credit negative" for the country. Moody’s said a "multi-notch" downgrade in Ireland’s Aa2 credit rating was "most likely" because the aid would increase the country’s debt burden.

Standard & Poor's Ratings Services late on Tuesday cut its long-term sovereign credit rating on Ireland to A from AA-, and its short-term rating to A-1 from A-1+.

The euro remains under pressure on speculation that an election in Ireland will hinder the nation’s aid talks with the European Union (EU) and the International Monetary Fund (IMF).

European Central Bank council member Axel Weber said on Thursday that governments can increase the size of the European Union-led bailout fund if necessary to restore confidence in the euro.

Contagion from Europe’s sovereign debt crisis is spreading to Spain, sparking concern that the bailout fund set up in May isn’t large enough to rescue the euro region’s fourth-largest economy.

The premium on Spanish debt over German bunds rose to a euro-era record yesterday and Portugal’s bonds fell on concern they will follow Ireland and Greece in asking for external aid.

European Markets on Thursday:

European stock benchmarks advanced as a strong pre-holiday rally in the US markets in the previous session offset lingering concerns on the deteriorating fiscal conditions of some of the debt-strapped eurozone nations.

Market sentiment also improved after Deutsche Bundesbank President and European Central Bank council member Axel Weber said that the euro area rescue fund has sufficient capital to calm financial markets.

Real-estate shares increased across the continent.

The Stoxx Europe 600 index rose 0.5% to 267.72.

National benchmark indexes rose in 13 of the 18 western European markets.

US markets were closed on Thursday for the Thanksgiving holiday, which led to low trading volumes across European markets. Wall Street will be shut for half a day on Friday due to Black Friday, which marks the unofficial start of the holiday shopping season.

The European region benchmark rebounded on Wednesday as Ireland’s government unveiled a four-year deficit- cutting plan and talks to bail out the country’s banks neared their conclusion.

The UK’s FTSE 100 index closed up 0.7% to 5,698.93 as gains for real-estate stocks and some miners helped lift the index. Germany’s DAX 30 index rose 0.8% to 6,879.66. The French CAC 40 index gained 0.3% to 3,760.42.

Weber said there is no alternative to the European currency union and the bailout fund has enough money to calm markets.

"I think we can rule out the pessimistic scenario that the fund could be exhausted," Weber said in a panel discussion in Berlin today. "We’ll do everything to safeguard the existence of the euro," he added.

Contagion from Europe’s sovereign debt crisis has spread to Spain, sparking concern that the bailout fund set up in May isn’t big enough to rescue the euro region’s fourth-largest economy. Spain saw its borrowing costs surge to an eight-year high.

Shares in Capital Shopping Centres Group were the biggest gainer in the FTSE index, climbing nearly 13% after the company said it had received a preliminary approach from Simon Property Group Inc.

The potential bid also provided a lift for other real-estate companies.

Separately, Capital Shopping Centres agreed to buy the Trafford Centre near Manchester in northwest England for 747.6 million pounds ($1.2 billion) in stock, the highest price ever paid for a British shopping center.

Bank of Ireland, Ireland’s largest bank, slid 3.8%, extending its weekly decline to 47%, the biggest in two years. Allied Irish Banks Plc slumped 12%.

Allied Irish Banks and Bank of Ireland, the nation’s biggest lenders, will probably have to boost their so-called core Tier 1 ratio to 15% from 8%, according to analysts.

Moody’s Investors Service placed on review for a possible downgrade the short-term bank deposit and debt ratings of Bank of Ireland, EBS Building Society and Irish Life & Permanent Group Holdings Plc, the ratings firm said in a statement.

German car makers BMW and Volkswagen both rose around 1%.

Intesa Sanpaolo SpA dropped 1.2%. Corrado Passera, the chief executive officer of Italy’s second- biggest bank, confirmed that the lender made a binding offer for Polbank, the Polish unit of Greece’s EFG Eurobank Ergasias SA, and is awaiting a response.

Daily Mail & General Trust Plc slumped 3.5% after the publisher of Britain’s Daily Mail newspaper said sales declined 4.6% to 1.97 billion pounds, compared with the 1.99 billion-pound average estimate of analysts.