No rewards in sight

People choose the paths that grant them the greatest rewards for the least amount of effort. - David Shore.

With hardly any effort from the bulls to shore up sentiment, today’s start is likely to be flat to steady. Things could get better later on provided the external situation improves.



The eurozone debt issues coupled with the geo-political tension on the Korean peninsula could cloud the local sentiment. FIIs have taken some money off the table and may remain on the sidelines for a while.

It has been rather volatile of late as far as the Indian market is concerned and the trend might not change much for the remainder of December.

And, while the Indian market has struggled post Diwali, the overseas markets seem to have held on well. Wall Street is currently at a two-year high. Even the European markets have gained this month, notwithstanding the sovereign debt problems. The much-dreaded rate hike from China hasn’t materialised either.

Back home, the RBI has taken the much expected pause in rate tightening while announcing measures to ease the cash crunch. Advance tax numbers have raised hope of a strong Q3. Inflation seems to have softened but still remains a threat. The EGoM this week on diesel and LPG prices will be an important event to watch out for.

Hero Honda will remain in focus in the wake of the formal break-up with Honda. IDFC and United Phosphorus could also be in the spotlight due to weekend M&A announcements.

Shares of Claris Lifesciences Ltd. will list today after its IPO just managed to scrape through.

Shares of Zee Learn Ltd. will list today pursuant to a Scheme of Arrangement.

The Indian market witnessed a late recovery on Thursday, with the Nifty closing above the short term moving average resistance of 10 DMA & 20 DMA. As the Nifty is oscillating in a broader triangle pattern, a convincing breakout above 6040 is necessary this week, in order to accentuate the buying momentum and a sustainable recovery.

FIIs were net sellers of Rs 3.16bn in the cash segment on Thursday, according to the provisional NSE data. The domestic institutional institutions were net sellers at Rs 960.3mn. FIIs were net buyers at Rs 11.06bn in the F&O segment on the same day. The foreign funds were net buyers of just Rs 100mn in the cash segment on Wednesday, according to the SEBI web site.

Asian Markets on Monday:

Asian stock indices were trading mixed with the regional benchmark falling for the third time in the past three days, as the lingering sovereign debt situation in the eurozone weighed on the sentiment even as tensions escalated on the Korean peninsula.

The MSCI Asia Pacific Index fell 0.1% to 133.49 as of 9:49 a.m. in Tokyo, with about six stocks declining for every five that advanced.

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 down 0.3% at 10,271 while the S&P/ASX 200 index in Sydney was flat at 4,765.

Hong Kong shares declined after a tentative start, with banks broadly lower and Chinese property developers extending losses as investors continued to lock in profits amid concerns that Beijing may tighten monetary policy.

The Hang Seng in Hong Kong was down ~0.4% at 22,631. The Shanghai SE Composite index in China was down 0.4% at 2,882.

Stocks in Seoul, South Korea were under some pressure against a backdrop of tension on the Korean Peninsula. Reports suggested that South Korea will hold firing drills later on Monday. North Korea last week had warned of fresh attacks if the South went ahead with the drills.

South Korea’s Kospi Index was down ~0.8% at 2,010.

The Taiex in Taiwan was up ~0.1% at 8,822 while the Straits Times index in Singapore fell ~0.4% at 3,141.

In the currency markets, the dollar rose against the euro and other rivals, with Europe’s sovereign debt woes and heightened tension on the Korean peninsular depressing investor appetite for risk-taking.

The dollar index - which measures the US currency against a basket of six major rivals - traded at 80.46 on Monday, up from 80.40 in late North American trading on Friday.

The euro traded at 1.3155, down 0.2% on the day.

European Union leaders agreed late last week to implement a permanent rescue fund for the region however the currency is struggling after the leaders "failed to agree on expanding the size of the bailout fund.

US Markets on Friday:

US stocks finished nearly unchanged on Friday, but the three main indices held at two-year highs and extended their recent winning streak to three straight weeks.

Upbeat earnings reports from Oracle and Research in Motion (RIM) help offset some of the negative vibes emanating from the debt-strapped eurozone even as President Barack Obama signed a tax-cut plan into law.

The Dow Jones Industrial Average closed off 7.34 points, or 0.1%, at 11,491.91, with its 17 of its 30 components lower.

Disappointment over the outcome of a European Union summit, which bolstered the US dollar, weighed on the index.

The S&P 500 index finished flat at 1,243.91, with materials the best performer and telecommunications the weakest of its 10 industry groups. It was the benchmark’s highest close since September 2008.

The Nasdaq Composite index climbed 5.66 points, or 0.2%, to 2,642.97.

For the week, the Dow gained 0.7%, the S&P 500 added 0.3%, and the Nasdaq Composite advanced 0.2%. It was the third-straight week of gains for the Dow and the S&P 500 and the fourth for the Nasdaq Composite.

For every seven stocks on the decline, eight were rising on the New York Stock Exchange, where 2 billion shares traded hands.

Wall Street's key volatility measure, the VIX, fell to its lowest level since April, as stocks took a breather from their recent run-up.

The dollar gained on the British pound, the euro and the Japanese yen.

Oil for January delivery gained 32 cents to settle at $88.02 a barrel.

Gold futures for February delivery added $8.20 to settle at $1,379.20 an ounce.

The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 3.33%.

The Conference Board’s index of leading economic indicators in November made its biggest jump in eight months. The index, which tracks data including orders for new goods, jumped 1.1%, after edging up 0.4% in the prior month. Economists had been expecting a 1.2% increase.

The index on leading economic indicators (LEI) data for November was released after the opening bell.

Separately, a government report on regional and state unemployment showed that more states suffered rising jobless rates in November than in the previous month. A total of 21 states and the District of Columbia reported higher unemployment rates, compared with 14 states in the previous month.

Quarterly results from software giant Oracle and Blackberry maker RIM topped Wall Street’s expectations late on Thursday.

Oracle shares ended up 3.9%, while Research in Motion’s U.S. shares gained 1.6%.

Ahead of Wall Street’s open, the Bank of Montreal said it would buy Wisconsin-based Marshall & Ilsley Corp. for $4.1 billion in stock, triggering a rally in regional bank stocks.

The transaction is based on a share price of $7.75 - nearly 34% premium over Marshall & Ilsley's closing price on Thursday.

Shares of Marshall & Ilsley surged 18%.

On Friday, President Barack Obama signed a bipartisan tax package, extending Bush-era tax cuts for virtually all American workers for another two years. The US House passed the legislation Thursday night.

The S&P 500 has gained nearly 6% since Obama agreed to compromise with Republicans on the tax plan. Increasing confidence about the political and economic outlook has sent the S&P nearly 20% higher since August.

Meanwhile, Moody’s Investors Service downgraded Ireland’s government-bond rating by five notches and said that the country had a weak economic outlook.

The rating agency cited "increased uncertainty regarding the country's economic outlook, decline in the Irish government's financial strength" and bank-related issues. Earlier in the week, Irish officials accepted IMF funds connected to its €85 billion bailout.

European Markets on Friday:

European stock benchmarks closed lower on Friday as disappointment over the European Union’s response to the simmering sovereign debt crisis and a downgrade of Ireland’s credit rating soured investors’ mood.

The Stoxx Europe 600 index fell 0.4% to 276.42 points. On a weekly basis, the index was little changed, but it’s up nearly 6% so far this month.

The French CAC 40 index declined 0.5% to 3,867.35 and Germany’s DAX 30 index shed 0.6% to 6,982.45. The UK’s FTSE 100 index slipped 0.2% to 5,871.75.

In Brussels, European leaders agreed to amend the EU treaty to enable the creation of a permanent stability mechanism. However, there was little progress on the size of a future mechanism and other key details.

In Dublin, the ISEQ index fell 0.5%, as Moody’s Investors Service slashed Ireland’s sovereign rating by five notches to Baa1 from Aa2. The move was in line with the agency’s forecast last month of a multi-notch downgrade that would see Ireland maintain an investment-grade rating.

The volatile Irish banking sector posted losses. Worries about Ireland were also behind sharp losses for some U.K. banks.

Italy’s FTSE MIB index dropped 1.5%, led lower by banks.

Pharmaceutical stocks mostly fell after a strong performance over the last few sessions.