Higher start…good way to begin with

Genuine beginnings begin within us, even when they are brought to our attention by external opportunities. - William Bridges.

We expect a higher start and a better day in office for the bulls today even as a few external irritants remain. Lack of buying from the big institutions has led to a drop on the volume front. Price erosion appears to have been done with on most counters, though one cannot really expect some Hero Honda kind of run in large counters.



Easing tensions between the two Koreas coupled with strength in the US market will likely perk up the mood in India. European stocks too managed to post modest gains despite persistent concerns over sovereign debt issues. Asian markets are mostly up this morning with the Kospi pacing the advance.

The key indices in India will likely remain choppy and rangebound in the near term. The Nifty is likely to remain in a range of 5750-6050. Support is expected to kick in at around 5860 while resistance is likely at around 6040. We expect a clear trend to emerge on the upside only after two consecutive close above the levels of 5965.

In terms of other markets, the dollar has inched higher while the euro remains subdued. Crude oil is hovering around the $90 per barrel mark. Gold and other commodities are firm as well.

The eurozone debt crisis will linger on and the credit downgrades may continue intermittently. But, the US economy seems to be showing good resilience. The revised GDP data will be out for the third quarter on Wednesday. Statistics are also expected on housing, income, spending, durable goods orders and consumer sentiment. China has delayed a rate hike but further tightening is inevitable and could materialise early next year.

For India, inflation is a major worry and the recent fall is partly due to the base effect. If diesel price is hiked, there will be a fresh spike. Reports also point to a possible increase in LPG. The first two months of 2011 will be important, as India Inc. will come out with its latest report card. The RBI will hold another policy meeting towards the end of January and Union Budget will be announced in February. The political scene remains heated and will have some sentiment impact on the markets in case of a major development.

FIIs were net sellers of Rs 1.09n in the cash segment on Monday, according to the provisional NSE data. The domestic institutional institutions were net buyers at Rs 1.39bn. FIIs were net buyers of Rs 7.78bn in the F&O segment on the same day. The foreign funds were net sellers of Rs 1.13bn in the cash segment on Thursday, according to the SEBI web site.

Asian Markets on Tuesday:

Asian stock indices were trading up in early morning trade, buoyed by strength in resource companies and positive outlook for the US economy. Fading tensions on the Korean peninsula also cheer investors across the region.

Regional sentiment was subdued after a lackluster performance by US stocks on Monday and as traders chose to stay on the sidelines ahead of the Christmas holidays.

Many investors were relieved that South Korean artillery tests conducted on Monday didn't provoke a military response from Pyongyang.

The MSCI Asia Pacific Index fell 0.3% to 133.73 as of 9:51 a.m. in Tokyo, with about three stocks rising for each that fell.

The gauge climbed to a two-and-a-half-year intraday high on Dec. 14 as US economic reports boosted confidence in a global recovery, partly offsetting concerns over Europe’s debt crisis and China’s efforts to slow its economy.

The Asia Pacific gauge fell 0.6% last month, the first decline in three months, amid concern that China will intensify efforts to curb inflation, speculation Europe will fail to contain the region’s sovereign-debt crisis from spreading and as tensions in the Korean peninsula escalated.

The Nikkei in Tokyo was up 0.7% at 10,291 while the S&P/ASX 200 index in Sydney was up nearly 0.8% at 4,772.

The Hang Seng in Hong Kong was up ~0.6% at 22,782. The Shanghai SE Composite index in China was up 0.1% at 2,856.

South Korea’s Kospi Index was up by almost 1% at 2,039. The Taiex in Taiwan was up ~0.2% at 8,789 while the Straits Times index in Singapore rose ~0.2% at 3,138.

In Seoul, the market got a lift from an easing of worries over a potential escalation in geopolitical tensions.

Investors will be keeping a watch on the outcome of the Bank of Japan's policy board meeting. The Japanese central bank is expected to leave its super-easy monetary policy unchanged, as it continues to gauge the impact of monetary easing measures it announced in October.

The focus will be on Governor Masaaki Shirakawa's comments, at a press conference.

US Markets on Monday:

US stocks closed nearly unchanged at the end of a choppy session as investors began to shift their focus to 2011. Investors brushed aside tensions that had risen after South Korea staged military drills from an island not far from North Korea’s shores.

However, the Dow Jones Industrial Average fell after concerns over proposed debit-card rules hit shares of American Express Co. Analysts expect the bull market to continue its run through January amid solid fourth-quarter financial results.

Drifting between gains and losses for much of the session, the Dow Jones Industrial Average closed down 13.78 points, or 0.1%, at 11,478.13. Of the index’s 30 components, 12 ended lower.

The S&P 500 Index closed up 3.17 points, or 0.3%, to 1,247.08, led by gains in the energy and consumer-discretionary sectors.

The Nasdaq Composite index added 6.59 points, or 0.3%, to 2,649.56.

Decliners edged past advancers on the New York Stock Exchange, where volume topped 829 million shares.

The greenback gained against other major currencies, with the dollar index at 80.595. The dollar’s rise to a two-week high against the euro came after the European Central Bank said its purchases of government debt fell steeply last week.

The three major indexes have been rising to two-year highs during the last few weeks, since President Obama announced the compromise deal on the Bush-era tax rates. Last Friday, the president signed a tax-cut plan into law.

The dollar fell against the Japanese yen, but edged higher against the euro and the British pound.

Oil for January delivery rose 79 cents to settle $88.81 a barrel.

Gold futures for February delivery rose $6.90 cents to $1,386.10 an ounce.

The price on the benchmark 10-year U.S. Treasury edged up, pushing the yield down to 3.34%.

US financial markets are closed on Friday in observance of the Christmas holiday the following day.

US stocks have risen about 5% this month, and are poised for double-digit gains for the year.

Tensions on the Korean peninsula flared up after Seoul's planned live-fire drill. North Korea said the drill could spark retaliation, but the country did not act immediately on Monday.

American Express led Dow decliners with a 3.4% drop. Stifel Nicolaus & Co. downgraded the charge-card issuer to hold from buy, citing a drag from the Federal Reserve’s plans to force reduction in debit-card interchange fees.

Boeing Co. was the second hardest hit among the blue chips, with shares falling 2.7%, on concern the aerospace manufacturer might again delay its 787 Dreamliner.

Intel Corp. slid 1.1% after The Wall Street Journal reported that European regulators were reviewing the chip maker’s proposed acquisition of McAfee Inc.

eBay said it has reached a deal to purchase brands4friends.com - Germany's largest online shopping site - for about $200 million. "The move is designed to strengthen eBay's position as a leading online fashion destination in Europe," the company said. Shares of eBay fell 0.8%.

Sara Lee Corp. is in talks to sell itself to a Brazilian meat-processing giant JBS SA, according to reports. The companies are sparring over price, however, stalling the deal. Shares of Sara Lee rose 2.5%

AT&T shares slipped 0.3% after the company said it will pay $1.93 billion for spectrum licenses from Qualcomm. AT&T said the move will bolster its 4G service.

After the closing bell, Adobe Systems reported a profit of $269 million, or 53 cents per share, compared to loss of $32 million, or 6 cents per share, during the same period a year earlier.

The San Jose-based company sales jumped 33% to just over $1 billion during the quarter. Analysts expect the company to report earnings per share of 52 cents on revenue of $988 million. The tech giant also delivered an upbeat forecast.

Shares of Adobe were up almost 7% in after-hours trading.

European Markets on Monday:

European stocks rose on Monday, with the Italian market leading the list of top gainers, but airlines and retailers fell on concerns that a severe winter weather would debt sales during the crucial holiday season.

The Stoxx Europe 600 index advanced 0.7% to end at 278.38 points. The benchmark finished last week little changed. Markets will likely run out of steam later in the week given the upcoming Christmas holiday.

The French CAC 40 index rose 0.5% to 3,885.08 while the German DAX 30 index rose 0.5% to end at 7,018.60. The FTSE 100 index ended up 0.3% at 5,891.61. In Italy, the FTSE MIB index rose 1.5%. Greece’s ASE Composite index slumped 3.2%.

Shares of Banco Popolare jumped after an Italian newspaper said that the Cariverona Foundation may acquire a 5% stake in the bank.

Autos were a key driver across Europe after upbeat comments from chief executives.

Shares of Volkswagen AG rallied 3.7% after its executive president for China was quoted as saying that the market for 2011 looks pretty healthy.

Shares of Credit Agricole SA fell 2.1%. After markets closed on Friday, the French bank said that it will take a writedown of 1.25 billion euros ($1.6 billion) in the fourth quarter on its 4.79% stake in Italian bank Intesa Sanpaolo.

The weather, meanwhile, was responsible for some downside.

Deutsche Lufthansa AG fell 0.8% after severe weather disrupted flights across Europe. Shares of British Airways PLC dropped nearly 2%.

Retailers in London also posted losses in the biggest shopping week of the year for the sector.