Getting closer to events

There are two things to aim at in life: first, to get what you want; and, after that, to enjoy it. Only the wisest of mankind achieve the second. – LP Smith.

Two big events are lined up in the run up to Diwali. First up will be the eurozone summit in Brussels on October 23. Expectations are running high on some sort of a deal on taming the debt crisis. However, scope for disappointment remains given the track record of the European leaders.

Second important event of course will be the RBI meet on Oct. 25. Calls for a pause have been growing for a while. The FM too has accepted difficulty in meeting key goals like GDP, fiscal deficit and disinvestment. At the same time, the Oil Minister has dismissed talk of a cut in fuel prices citing weakness in the Rupee. The RBI’s approach will be closely watched.



Indian indices are likely to dip at start owing to overnight selloff in the US and a fall in Asian markets. Stocks in Europe were higher though amid hopes of a major plan on resolving the region’s credit crisis.

Bajaj Auto, Yes Bank, Thermax, Exide, Piramal Healthcare, UltraTech Cement, Dhanlaxmi Bank and IDBI Bank are among the key results to watch out for.

FIIs were net sellers of Rs 144.5mn (provisional) in the cash segment on Wednesday, according to NSE data. The domestic institutional institutions (DIIs) were also net sellers at Rs 944.6mn on the same day.

FIIs were net buyers of Rs 8.04bn (provisional) in the F&O segment, according to NSE web site.

The foreign funds were net sellers at Rs 2.49bn in the cash segment on Tuesday, as per SEBI data. Mutual funds were net sellers at Rs 751mn on the same day.

Other Key Results Today: Bajaj Holdings, DB Corp., Deepak Fertilizers, Dewan Housing, Esab India, GHCL, Gujarat Alkalies, GNFC, GSFC, Hexaware, Indiabulls Power, Indiabulls Real Estate, Indiabulls Securities, Info Edge, Kirloskar Brothers, KPIT Cummins, Noida Toll, SREI Infra, Sterlite Technologies and Swaraj Engines.

Global Events Today: Germany's PPI, UK retail sales, US weekly jobless claims, US leading indicators, Philadelphia Fed Manufacturing Survey, US existing home sales and a speech by James Bullard, the President of the Federal Reserve Bank of St. Louis.

Markets will also keep Greece on radar as its government goes through another parliamentary litmus test on austerity measures. As usual, wide protests broke out in the debt-strapped Greece against the budget cuts needed to secure rescue funds from international lenders.

The Federal Reserve’s beige book survey paints a bleak picture of the US economy, but doesn’t see recession as yet. The U.S. economy continues along about the same modest pace as seen in August, according to the Fed report.

The CBOE VIX in the US was up 9% on Wednesday.

Asian Markets on Thursday:

Asian markets were mostly down, as investor sentiment was hit by a late selloff in the US markets overnight which was triggered by a downbeat assessment of the world's largest economy by the Federal Reserve.

At the same time, doubts prevail over the European officials' resolve to rein in the region's crippling debt crisis at this weekend's important summit in Brussels.

The MSCI Asia Pacific Index was down 1.2% at 11:24 a.m. in Tokyo. About four stocks declined for each that rose on the index. It gained 3.4% last week.

The Nikkei in Tokyo was down ~0.9% at 8,692. The Hang Seng in Hong Kong dropped ~1.7% at 18,005 while the Shanghai Composite index in China was down ~1.4% at 2,345.

The Kospi in South Korea was down ~0.1% at 1,853 while the Taiex in Taiwan was down ~0.9% at 7,288.

The Straits Times in Singapore was down ~0.3% at 2,712. The S&P/ASX 200 index in Australia fell ~1.6% at 4,145 while the NZX 50 index in New Zealand was down ~0.25% at 3,291.

US stocks fell amid concern about the strength of the economy and an impasse over European bailout talks.

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, indicated that an impromptu meeting of European leaders in Frankfurt failed to resolve differences ahead of the Oct. 23 Brussels summit.

Separately, the Fed’s Beige Book survey showed that American companies showed more doubt about the recovery even as the economy maintained its modest expansion last month.

The Beige Book said many Fed districts described the pace of growth as ‘modest’ or ‘slight’ in September, even though overall economic activity continued to expand.

French President Nicolas Sarkozy flew to Frankfurt yesterday for a meeting with German Chancellor Angela Merkel, the ECB's outgoing President Jean-Claude Trichet and IMF Managing Director Christine Lagarde.

Germany and France have yet to agree on how to bolster the European bailout fund as they seek to overcome technical hurdles and to complete a plan to stem the debt crisis, another report said.

Europe’s leaders are looking for ways to maximize the firepower of the 440 billion-euro ($605.5 billion) European Financial Stability Facility in a bid to address the fiscal crisis.

The 17-nation euro currency was subdued after a split emerged between France and Germany over Europe’s rescue strategy and the head of Finland’s parliament finance committee said plans to boost the region’s rescue fund through leverage disguise potential costs.

Asian stocks had gained on Wednesday after a British newspaper reported that Europe’s key bailout fund would be expanded by close to $2.5 trillion. However, another news rubbished the UK paper's reports of Germany and France having agreed to raise the EFSF.

US markets on Wednesday:

US equity benchmarks slumped owing largely to a late session selling, as a weak report on the state of the economy, disappointing earnings from Apple, and anxiety over European efforts to fix the region’s debt problems kept investors at bay.

The Dow industrials fell 72.43 points, or 0.6%, to end at 11,504.62, after rising nearly 57 points and falling as much as 108 points.

The S&P 500 Index was down 15.5 points, or 1.3%, at 1,209.88 points. It had risen as high as 1,229.64.

Losses were led by declines in the metals and materials sector, followed by technology. Utilities was the only sector to gain. Defensive plays such as healthcare also outperformed.

The Nasdaq Composite Index slid 53.39 points, or 2.01%, at 2,604.04, weighed down by a 5.6% drop in the shares of Apple.

Trading was relatively light.

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

Oil for November delivery decreased $2.26 to $86.14 a barrel.

Gold futures for December delivery dropped $9.40 to $1,643.40 an ounce.

The price on the benchmark 10-year U.S. Treasury fell, barely pushing the yield up to 2.16% from 2.15% Tuesday.

US indexes had been higher before the Federal Reserve’s afternoon release of regional indicators, known as the Beige Book. The report said that many districts saw “modest” to “slight” growth. “Contacts generally noted weaker or less certain outlooks for business conditions,” the report said.

French President Nicolas Sarkozy was expected to fly to Frankfurt to meet with German Chancellor Angela Merkel, IMF chief Christine Lagarde and other officials ahead of a key summit meeting of euro-area leaders on Sunday, news reports said.

Sarkozy reportedly told French lawmakers that a dispute over how to boost the firepower of the European Financial Stability Facility (EFSF), the region’s bailout fund, had stalled talks.

Stocks had been bolstered late on Tuesday after an article in a UK newspaper said that Germany and France had agreed on a plan to expand the bailout fund to 2 trillion euros, or $2.67 trillion. The article was later refuted by another report.

EU leaders are expected to announce progress on the region’s debt crisis at a summit meeting this Sunday. European leaders need to come up with a large-funded, specific plan. A more powerful fix to the euro-zone crisis could provide a floor for stocks.

The latest economic report showed a spike in inflation in September. A 3.9% jump in prices over the last 12 months marked the biggest rise in three years. Inflation came in as expected in September, with the Consumer Price Index rising 0.3% during the month.

Core CPI, which strips out volatile food and energy prices, rose 0.1% in September.

For the year, CPI is up 3.9%, the biggest annual change in three years.

Housing starts jumped 15% in September to a 17-month high, according to the Commerce Department. Increased demand for rental stock and rebuilding after Hurricane Irene supported new construction.

Alcoa and Bank of America led Dow decliners, falling more than 3%.

Travelers Cos. shares rallied, leading the blue-chip gains, after the insurer’s earnings report included progress on raising prices - signaling the industry may be on the mend. The company told investors that consumers were willing to accept higher insurance premiums.

Intel shares rose after the semiconductor maker reported a 17% jump in quarterly earnings.

Apple had its worst session since December 2008 after the consumer-electronics maker reported earnings that fell short of analysts’ estimates because of a surprise drop in iPhone sales from the June quarter.

Morgan Stanley pared earlier gains to close up. The investment bank reported a jump in profit and a 46% surge in revenue. Accounting for changes in credit spreads boosted its bottom line, similar to other big banks this quarter.

Shares of Abbott Laboratories rose after the medical company said that it will split into two separate publicly traded companies. One company will be focused on medical products, and retain the name Abbott, and the other will focus on research-based pharmaceuticals, with a name to be revealed at a later date.

Abbott also released earnings that came in slightly above expectations.

European Markets on Wednesday:

European stock indices managed to close modestly higher amid optimism that the region's leaders will be able to reach some kind of agreement on how to prevent the debt crisis from worsening at this weekend's summit in Brussels.

European Union leaders are meeting in Brussels this weekend for a closely watched summit.

The Stoxx Europe 600 index rose 0.6% to end at 236.71 after two days of losses.

London’s FTSE 100 index rose 0.7% to 5,450.49 while the French CAC 40 index was up 0.5% at 3,157.34. The German DAX 30 index advanced 0.6% to close at 5,913.53.

European stocks were boosted by a report in a British newspaper late on Tuesday that France and Germany have agreed on a plan to expand the European Financial Stability Facility (EFSF) to 2 trillion euros.

However, a German finance ministry spokesman and another report clarified that there has been no decision on how to make the EFSF more efficient. Reports also said that euro-zone leaders have narrowed differences but are still short of a deal on a comprehensive solution to the crisis.

Investors shrugged off news that Moody’s Investors Service downgraded Spain’s government bond ratings to A1 from Aa2.

In Madrid, the IBEX 35 index rose 0.4% to 8,849.50.

Shares of ARM Holdings and ASML Holding fell after Apple's earnings missed expectations.

Shares of British Sky Broadcasting Group rose after quarterly results. News Corp. holds a minority stake in BSkyB.

Shares of Diageo gained after the spirits group said that organic net sales rose 9% in the quarter ended Sept. 30, with volume up 5%. Chief Executive Paul Walsh said Diageo continues to expect first-half net sales growth will “improve on that delivered in fiscal 2011.”

Shares of Alcatel-Lucent fell nearly 8%. The telecom-equipment maker said that it received a $1.5 billion binding offer for its Genesys unit from private-equity group Permira.