Courage at start

In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand – Benjamin Graham.

After another tumultuous week, we are headed for a positive start despite oil prices climbing in the wake of the air strikes on Libya. Most Asian markets have for now shrugged off the new developments in MENA, Japan’s continuous struggle to contain nuclear contamination and China’s latest RRR hike. Japan’s markets are shut today for a holiday.



US markets closed higher on Friday for a second straight day but finished in the red for the week. European stocks managed slender gains but were down for the week.

While the opening will be in the green, the gains may peter out later in the day amid concerns about surging oil prices and the MENA unrest.

Volatility will stay elevated. The fact that the key indices are still trading below their 200-DMA is a big worry. Even if they do manage to surpass the key technical levels, there is no immediate certainty about the near term direction of the market.

Among the major domestic concerns has been lack of meaningful progress on reforms amid a series of controversies. FII inflows too are yet to turn around.

The Indian markets made a lower high and a lower low on weekly candlestick chart last week. With the Nifty violating key support level of 5400, we could see accentuated selling in the near term which can take the index toward of 5300.

FIIs were net sellers of Rs 5.23bn in the cash segment on Friday, according to the provisional NSE data. The domestic institutional investors (DIIs) were net buyers at Rs 2.96bn on the same day. FIIs were net sellers at Rs 13.06bn in the F&O segment.

The foreign funds were net sellers at Rs 4.05bn in the cash segment on Thursday, as per final SEBI data. Mutual Funds were net buyers at Rs 650mn in the cash segment on the same day.

Asian Markets on Monday:

Asian markets advanced, notwithstanding a fresh spike in crude oil prices in the wake of the weekend aerial assault by the US and allied forces in Libya. Regional energy stocks rose. Sentiment was also supported by healthy US data.

Japanese markets are closed for a public holiday.

The MSCI Asia Pacific, excluding Japan Index was little changed at 452.90. About twice as many stocks rose as fell on the gauge, which has lost 5.5% this year.

The Hang Seng in Hong Kong was up 1% at 22,530 while the Shanghai Composite index in China was down ~0.1% at 2,903. The Kospi in Seoul climbed ~1% at 2,000 while the Straits Times in Singapore gained 0.8% at 2,959.

The Taiex in Taiwan was up 0.75% at 8,458 while the S&P/ASX 200 index in Australia rose ~0.1% at 4,632. New Zealand's NZX 50 index was up 0.25% at 3,347.

The broader MSCI Asia Pacific Index last week recorded its biggest weekly drop since the height of the European debt crisis last May.

The yen declined for a second day against all its major counterparts on speculation that the Group of Seven (G7) nations will continue to support Japan buy jointly selling the currency.

G7 members sold the Japanese currency on March 18 after it reached a postwar high.

The euro strengthened versus the yen on the prospect that European Central Bank (ECB) President Jean-Claude Trichet will today reiterate his willingness to increase interest rates next month.

The euro rose versus 11 of its 16 major counterparts.

The dollar managed to avert heavy losses amid continuing turmoil in the Middle-East and North Africa.

The US and allied forces launched an air offensive against Libya, adding to the concerns that the regional unrest will spread in other parts of the world's key oil-producing region.

A no-fly zone is now in place over Libya, Admiral Mike Mullen, chairman of the US Joint Chiefs of Staff said. The coalition ordered Libyan leader Muammar Gaddafi to withdraw his forces from major cities .

US Markets on Friday:

US stock indices rose for a second day in a row on Friday but closed off session highs and finished down for the week as investors weighed risks from the persistent strife in the MENA region and Japan's ongoing nuclear problems.

The gains were supported by a spate of dividend announcements from major banks and a decision by global central banks to intervene in the currency markets to help Japan recover from its worst earthquake.

The Dow Jones Industrial Average closed up 83.93 points, or 0.7%, at 11,858.52, losing some steam in afternoon trading after gaining more than 150 points.

The Standard & Poor’s 500 Index gained 5.49 points, or 0.4%, to 1,279.21, with financials the best-performing sector among its 10 industry groups.

The Nasdaq Composite Index rose 7.62 points, or 0.3%, at 2,643.67.

For the week, the Dow average lost 1.5%, the S&P 500 slid 1.9% and the Nasdaq Composite lost 2.7%.

While the Dow and S&P 500 remain modestly higher for the year, this week's declines have now put the Nasdaq down 0.4% year-to-date.

On the New York Stock Exchange, advancers topped decliners by more than 2-to-1, where 1.9 billion shares traded hands.

Treasurys edged lower, sending yields on the 10-year note up 1 basis point to 3.28%. For the week, however, Treasurys rallied on demand for safe-haven assets, with yields falling from 3.4% a week ago.

After rising to an intraday high of $103.66 a barrel, crude-oil futures for April delivery finished at $101.07, down 35 cents, on the New York Mercantile Exchange.

The dollar gained 2.3% against the yen to ¥80.756, its biggest one-day gain since mid-September. At one point it surged 3.7%. The dollar had tumbled against the yen since a devastating earthquake.

The Japanese yen had been driven sharply higher in recent days by global uncertainty and the prospect of more cash flowing into Japan.

Gold futures for April delivery rose $11.90, or 0.8%, to trade at $1,416.10 an ounce.

Sentiment was bolstered after the world’s seven biggest industrialized nations agreed to a plan to bring the Japanese yen down from historic highs.

Libya’s foreign minister announced a cease-fire and said that the government would halt military operations in the North African nation.

Reports later indicated heavy fighting in at least one Libyan city even as western powers moved closer to taking military action in the oil-producing country.

The United Nations Security Council earlier passed a resolution, agreeing late on Thursday to allow “all necessary measures” to protect civilians in the wake of a month-long rebellion against Moammar Gadhafi’s regime.

Bank stocks rose after the Federal Reserve announced that some large lenders had the go-ahead to raise dividends, with several immediately unveiling plans to raise shareholder payouts.

Among the firms to announce dividend hikes were JPMorgan Chase, Wells Fargo and US Bancorp, which each saw their shares climb.

Cisco Systems shares rose 0.8% after the company announced a new 6 cents-a-share dividend.

Nike shares tumbled 9% after the company reported disappointing earnings and said it would raise prices on many of its products because of higher commodity prices.

Celera shares soared 34% after Quest Diagnostics announced it would buy Celera for $344 million, or $8 a share.

Shares of tax-software maker Intuit rose 3% after the company said that the number of users of its TurboTax software jumped 7% compared to a year ago.

European Markets on Friday:

European stock benchmarks ended with modest gains on Friday, but were down for the week, as investors digested conflicting reports about the situation in Libya and continued to be anxious over the Japanese nuclear crisis.

European investors also mulled news that the Group of Seven (G7) intervened jointly in the currency markets to halt the rising Japanese yen. The Stoxx Europe 600 index gained 0.2% to end at 267.63.

Earlier, the regional index had risen as high as 269.78 on news that Libya’s government has declared an immediate cease-fire.

But, media reports later suggested that fierce fighting continued between opposition and pro-government forces despite the announcement of a cease-fire.

For the week, the Stoxx 600 index fell 2.8%.

In Germany, the DAX 30 index closed up 0.1% at 6,664.40, substantially paring its intraday gains. The FTSE 100 index ended up 0.4% to 5,718.13. In France, the CAC 40 index rose 0.6% to 3,810.22.