Subdued before Christmas

Happiness arises in a state of peace, not of tumult. - Ann Radcliffe.

Key indices are set to open a tad higher, supported by positive finish in the US and Europe. Crude oil has crossed $90, which again is not making life any easier for the policymakers. Copper prices are also near record highs after appreciating ~30% this year.



The political scene is in a state of tumult. The BJP has upped its ante demanding the Prime Minister’s resignation or a JPC probe. The Finance Minister has offered to hold a special parliament session to break the logjam and discuss the Opposition demand for a JPC to probe the 2G spectrum allocation scandal. Spiraling prices of onions, the Gujjar agitation and Mamata Banerjee threatening to go alone in WB polls are just some of the added worries for the UPA.

Back to markets, trading volumes have eased off ahead of Christmas and year-end. Overall trend has turned rather lackluster. Asian markets are largely positive but not by a great deal. Japanese markets are shut today. Concerns on the Korean geo-political situation may prevail as Seoul is likely to conduct more military exercises. Most overseas markets will be shut on Friday ahead of Christmas.

FIIs were net sellers of Rs 675.7mn in the cash segment on Wednesday, according to the provisional NSE data. The domestic institutional institutions were net buyers at Rs 989.3mn. FIIs were net buyers of Rs 9.47bn in the F&O segment on the same day. The foreign funds were net buyers of Rs 2.25bn in the cash segment on Tuesday, according to the SEBI web site.

US stocks closed higher on Wednesday with the S&P 500 index extending its recent winning streak to five. Third-quarter US GDP growth was revised up to 2.6% versus the previous estimate of 2.5%. However, the revision fell short of consensus forecast of 2.8%. Watch out for a string of statistics on Thursday, including initial jobless claims, durable goods orders, consumer sentiment and new home sales.

The euro fell to a fresh record low against the Swiss franc on Wednesday as concerns over the fiscal health of countries on the periphery of the eurozone continued. The dollar gave up gains against the euro after a report showed that November sales of existing homes in the US increased by less than some analysts expectations.

A2Z Maintenance shares will list today; its IPO barely managed to sail through. Tata Steel will be in focus Rio Tinto has offered $3.9bn for Riversdale and India’s state-run ICVL is mulling a counter bid. Infrastructure companies may see some action amid reports that the Government may bring all annuity projects under FRBM framework. SKS Microfinance could gain after banks held talks with the RBI. Koutons Retail is reportedly considering stake sale to cut debt and revive its sagging fortunes.

OMCs will be in focus as the much-awaited EGoM on diesel and LPG price hike may take place on Dec. 30. Also, the Finance Ministry has said it will bear a third of the subsidy bill. Indiabulls Real Estate will continue to be in spotlight as Delhi High court is due to take up its plea in the Bharat Mill case. GoAir is contemplating an IPO to repay debt and buy new aircraft.

HCC is likely to be under pressure as the Bombay High Court has refused to stay the Environment Ministry’s order on Lavasa construction. Fortis Healthcare has picked up 30% in an Australian company. RIL may also be in action amid reports of rising drilling costs.

Asian Markets on Thursday:

Asian stock indices were trading mixed in early morning trade on Thursday, but were mostly positive amid strength in resource related stocks. Japanese markets are shut today for a public holiday.

Concerns on the Korean geo-political situation may prevail as Seoul is likely to conduct more military exercises. Most overseas markets will be shut on Friday ahead of Christmas.

Sentiment in Asia was positive after a government report showed that the US economy expanded faster than previously estimated in the July to September quarter, fueling confidence in a global economic recovery.

The MSCI Asia Pacific Index (Ex-Japan) Index was up 0.2% at 471.56 as of 9:43 a.m. in Hong Kong, with about two stocks rising for each that fell.

The MSCI Asia Pacific Index 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 S&P/ASX 200 index in Sydney was up 0.6% at 4,807. The Hang Seng in Hong Kong was up ~0.2% at 23,085. The Shanghai SE Composite index in China was down 0.3% at 2,868.

South Korea’s Kospi Index was down ~0.2% at 2,034. The Taiex in Taiwan was up ~0.5% at 8,903 while the Straits Times index in Singapore rose ~0.4% at 3,156.

New Zealand’s NZX 50 Index gained 0.1% as economists said that the economy will rebound after a Statistics New Zealand report today showed gross domestic product unexpectedly contracted in the third quarter.

US stocks and oil climbed to the highest levels since 2008 yesterday after government reports showed that the economy expanded faster than previously estimated and crude supplies dropped to the lowest level since February.

The Standard and Poor’s 500 Index gained 0.3% to 1,258.84 at 4 p.m. in New York yesterday, driving its gain this year to 13%. The S&P 500 closed at the highest level since Sept. 8, 2008.

The broader market gauge rose for the fifth day after a report showed that the world’s largest economy grew at a 2.6% annual rate last quarter, above the government’s previous estimate of 2.5%.

The Federal Reserve’s preferred inflation gauge, which is tied to consumer spending and strips out food and energy, rose at a 0.5% pace for the slowest growth since records began in 1959.

Crude oil rose 0.7% to $90.48 a barrel in New York, with futures rallying after the US Energy Department said stockpiles dropped 5.33 million barrels. Crude for February delivery reached the highest level since October 2008.

US Markets on Wednesday:

US stock benchmarks closed higher, hitting fresh two-year highs, as investors remained prepared to bring down curtains on 2010 and braced for 2011 ahead of the extended Christmas weekend.

Dow Jones Industrial Average ended up 26.33 points, or 0.2%, at 11,559.49, its highest close since Aug. 28, 2008.

The S&P 500 index added 4.24 points, or 0.3%, to 1,258.84, with financials leading gains among its 10 industry groups and technology companies leading decliners. It was the benchmark’s highest close since Sept. 8, 2008.

The Nasdaq Composite Index rose 3.87 points, or 0.2%, to 2,671.48.

For every nine stocks that rose, six fell on the New York Stock Exchange, where volume was 784.4 million, or 75% of its 30-day average.

The S&P 500 and the Nasdaq have posted gains for 14 of the month's 16 trading sessions so far. All three major indexes are positioned for double-digit gains for the year.

Crude oil rose 0.7% to $90.48 a barrel in New York, with futures rallying after the US Energy Department said that stockpiles dropped 5.33 million barrels. Crude for February delivery reached the highest level since October 2008.

The dollar was down against the euro and the Japanese yen, and it was up slightly against the British pound.

Gold futures for February delivery fell $1.40 to settle at $1,387.40 an ounce.

Copper prices have been on an upswing of late - the metal is up nearly 30% this year.

The price on the benchmark 10-year US Treasury ticked lower, pushing the yield up to 3.34% from 3.33% late on Tuesday.

Before the opening bell, the government revised slightly higher its estimate of third-quarter economic growth. But, the updated estimate came in below analysts’ expectations.

The Commerce Department said the economy grew 2.6% in the third quarter - slightly more than the 2.5% previously reported. The third and final take on third-quarter gross domestic product (GDP) was slightly less than the 2.7% expected by economists.

Later, the National Association of Realtors said that sales of previously-owned homes jumped 5.6% in November to an annual rate of 4.68 million. The rate was down 27.9% from 12 months earlier.

Before the opening bell, Walgreen Co. reported record quarterly earnings and sales for the first quarter of fiscal year 2011. Earnings per share rose 62 cents for the quarter ended Nov. 30 - blowing past analyst expectations of 54 cents.

The pharmacy's profits jumped 18.8% to $580 million, up from $489 million in the same quarter a year ago. Shares of Walgreen ended 5.5% higher.

American Airlines severed its relationship with online travel site Orbitz after an Illinois court said the airline could cancel its contracts. Shares of its holding company, AMR Corp. fell 1.2%.

Shares of Nike fell 5.8% after the athletic shoe and apparel seller warned that climbing prices for cotton and transportation would squeeze its margins.

American Greetings Corp.'s third-quarter profit increased to $32.2 million, or 78 cents a share, beating Wall Street estimates.

ARM Holdings PLC's US-listed shares advanced in pre-market trading. Microsoft Corp. plans to roll out a new version of Windows that will use the British firm's chip technology, according to reports.

Navistar International Corp. reported a 55% decline in quarterly profit, though revenue rose.

European Markets Wednesday:

European stock indices managed to extend their winning streak to a third successive session on Wednesday, boosted by gains in auto makers and chip maker ARM Holdings. The upbeat sentiment could partly be attributed to encouraging economic data in the US.

US third-quarter GDP was revised up slightly to 2.6% from a prior estimate of 2.5%, while data from the National Association of Realtors showed sales of existing U.S. homes rose 5.6% in November.

The Stoxx Europe 600 index rose 0.1% to close at 281.45. The benchmark closed up 1% in the prior session and is up 10.9% since the beginning of 2010.

The French CAC 40 index ended 0.2% lower at 3,919.71, while Germany’s DAX 30 index fell 0.1% to close at 7,067.92. London’s FTSE 100 index rose 0.5% to close at 5,983.49.

ARM Holdings rallied on media reports that Microsoft Corp. will announce a new version of its Windows operating system that runs on technology provided by ARM.

The UK's GDP growth was revised down to 0.7% in the third quarter - down from 0.8% previously published, according to the Office for National Statistics. Even though the country's economic output was revised slightly lower, it remained 2.7% higher than the same quarter last year.

Shares of German airline Deutsche Lufthansa added 0.2%, recovering some ground lost as harsh wintry weather disrupted flights across Europe and the UK in recent days. British Airways rose 1.9%.

The Daily Telegraph reported that BA has likely suffered a loss of 30 million to 40 million pounds ($46 million to $62 million) due to the weather.

Utility shares were firmer though, as the weather continued to boost demand for services by related companies, with Suez Environment in Paris and Severn Trent in London each rising 2.1%.

Elsewhere, the Greece ASE Composite index fell 0.7% to 1,449.12, with shares of National Bank of Greece losing 3.5%.

Late on Tuesday, Fitch Ratings Service warned that it could downgrade Greek debt to junk status. The review is expected to be completed in January, with Fitch due to look at the country’s fiscal sustainability, economic outlook and reform efforts by the government.

A strike by public-sector transport workers brought transit and traffic to a halt in Athens as lawmakers prepared to vote on the 2011 budget plan, which includes additional austerity measures.

The Greek parliament late on Thursday approved the 2011 budget that imposes yet more austerity on the debt-choked nation.