Fuel for thought!

"Contentment consist not in adding more fuel, but in taking away some fire." - Thomas Fuller.

A week before the winter session of Parliament, the heat seems to be taken away as fuel price rise may no longer remain an issue of debate. Petrol prices have been lowered even as airlines’ woes may rise with an increase in the jet fuel prices. State-run oil companies could be at the receiving end following the cut in petrol prices.

As far as the market is concerned, the start is likely to be flattish amid mixed global cues. US stocks managed to close higher, buoyed by a rally in technology space. But, European indices fell as borrowing costs for Italy and Spain continued to rise. Asian benchmarks are mostly in the red this morning.



With the result season wound up, the sentiment will be driven largely by external events and domestic macro-economic developments. The outlook remains cautious amid sideways trading pattern. Fresh buying could be initiated once the Nifty reclaims 5120. The broad trading range for the Nifty continues to be 5000-5400 from the short-term perspective.

FIIs were net sellers of Rs 4.09bn (provisional) in the cash segment on Tuesday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 2.05bn on the same day.

FIIs were net buyers at Rs 2.15bn in the cash segment on Monday, according to SEBI web site. Mutual Funds were net sellers at Rs 402mn on the same day.

BOJ interest rate decision, EU CPI data, Bank of England Governor King's Speech, Bank of England Quarterly Inflation report, US CPI data and US industrial production are among the key data points to keep an eye on later in the day.

Also keep a watch on the Rupee, which declined to a 32-month low versus the US dollar on Tuesday.

In other news, HDFC Bank overtook SBI in terms of market capitalization.

Asian Markets on Wednesday:

Asian equity markets were trading mostly in the red, notwithstanding a positive session for the US markets overnight as Italian and Spanish borrowing costs continued to climb, keeping investors on tenterhooks.

The MSCI Asia Pacific Index dropped 0.5% at 117.08 as of 10:07 a.m. in Tokyo after swinging between gains and losses at least eight times. The index was down 0.9% yesterday. It had dropped by 2.4% last week.

The Nikkei in Japan was down 0.1% at 8,529. The Hang Seng in Hong Kong lost ~2% at 18,976 while the Shanghai Composite index in China was down ~1.3% at 2,498. The Kospi in South Korea fell ~0.6% at 1,875 while the Taiex in Taiwan was down ~1.2% at 7,403.

The Straits Times in Singapore was down ~0.5% at 2,798. The S&P/ASX 200 index in Australia declined ~0.4% at 4,267 while the NZX 50 index in New Zealand dropped 0.9% at 3,288.

Australian manufacturing activity slumped in the third quarter as a strengthening currency, rising costs and a weak local economy continued to erode confidence. An uncertain global environment also hit business sentiment.

National Australia Bank's Manufacturing Activity Index fell to -0.9 in the third quarter from +0.2 in the second.

Meanwhile, with Italy's benchmark sovereign yield above the key 7% level, concerns about European defaults have only increased. The yield on Italy’s 10-year government bond flirted with the 7% mark again, while Spain’s 10-year yield rose to around 6.26%.

Spain faces a weekend general election, which polls show the ruling Socialist party is expected to lose.

GDP data for the eurozone also left investors sour, with the latest figures pointing to a recession shortly for the debt-strapped region. German economic sentiment too tumbled this month from October.

US Markets on Tuesday:

US equity benchmarks closed higher, with the technology space pacing the rally, as investors on Wall Street welcomed better-than-expected economic reports amid persistent worries over the eurozone debt crisis.

Stocks opened lower on the back of rising bond yields in Europe but regained ground in the afternoon as the focus shifted to encouraging reports on the US economy.

After falling as much as 77.7 points and gaining 86.1 points, the Dow Jones Industrial Average rose 17.18 points, or 0.1%, to end at 12,096.16.

The S&P 500 Index gained 6.02 points, or 0.5%, to close at 1,257.81, with technology performing best of its 10 sub-sectors. Only energy closed lower.

The Nasdaq Composite Index advanced 28.98 points, or 1.1%, to finish at 2,686.20.

For every stock on the decline, nearly two gained on the New York Stock Exchange.

Trading volume was lighter than average. NYSE exchange volume of 781 million was less than 80% of the last month’s average.

NYSE composite volume was 3.5 billion. On Monday, composite volume had fallen to just over 3 billion, its lowest since May 27, or about a third less than its daily average of 4.35 billion.

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

Oil for December delivery rose 34 cents to close at $98.48 a barrel.

Gold futures for December delivery slid $8.20 to end at $1,770.20 an ounce.

The price on the benchmark 10-year US Treasury edged higher, pushing the yield down to 2.03% from 2.04% Monday.

Data from the Commerce Department showed retail sales climbing more than estimated in October.

Retail sales rose 0.5% in October, boosted by strength in electronics and home improvement. The increase beat expectations of a 0.4% rise, but was lower than the 1.1% gain in the previous month.

Separately, the Federal Reserve Bank of New York’s index of economic activity edged upward - its first positive reading since May. The index increased to 0.6, from negative 8.5 last month. Economists were expecting the index to come in at -0.8.

Figures from the Labor Department showed prices paid to wholesalers in October falling the most in four months.

Producer prices slipped 0.3% in October, following a 0.8% rise in September. Analysts expected producer prices to have dropped by 0.2%.

Italy's 10-year bond yield topped 7% following a lackluster reading on third-quarter eurozone economic growth.

Meanwhile, the 10-year bond yield for Spain jumped as high as 6.3%. French bonds were also moving higher, raising worries that the debt crisis is spreading to eurozone's core regions.

A report showed a 0.2% rate of economic growth for the countries in the eurozone in the third quarter - in line with expectations. That was also the same rate of growth reported in the previous quarter.

Wal-Mart Stores and Home Depot both reported quarterly results before the bell, ended lower.

Staples cut its full-year earnings forecast, and posted quarterly results that fell short of expectations. Shares of the company fell 3.7%.

After the closing bell, Dell reported third quarter earnings that beat analysts' expectations, but sales came in below forecast.

The PC maker earned 54 cents a share, up from 45 cents a year ago. Analysts were looking for 47 cents a share.

Dell's sales were at $15.4 billion, just below what analysts had anticipated.

European Markets on Tuesday:

European stock indices finished extended recent losses as rising borrowing costs for Italy and Spain continued to weigh on the sentiment amid anxiety over the recent leadership change in Greece and Italy.

The Stoxx Europe 600 index dropped 0.6% to end at 237.04. The index pared losses after the announcement of positive economic data in the US.

The Spanish IBEX 35 index fell 1.6% to 8,237.60 while In Milan, the FTSE MIB index was down 1.1% at 15,297.60.

The yield on Italy’s 10-year government bond flirted with the 7% mark again, while Spain’s 10-year yield rose to around 6.26%.

Spain sold 3.2 billion euros ($4.4 billion) of 12-month bills at auction, but borrowing costs shot higher. The country faces a weekend general election, which polls show the ruling Socialist party is expected to lose.

Greece’s ASE Composite index dropped 3.6% to 735.65.

The French CAC 40 index shed 1.9% to 3,049.13. The German DAX 30 index fell 0.9% to 5,933.14. The UK’s FTSE 100 index lost 0.03% at 5,517.44.

Third quarter euro-zone GDP rose by 0.2% from the preceding three months and by 1.4% on an annual basis. The German economy grew 0.5% in the third quarter compared to the second quarter, and French GDP rose 0.4%.

In other economic news, the ZEW German economic sentiment indicator fell to minus-55.2 in November from minus-48.3 in October.

Cable & Wireless shares sank more than 26% after the telecom company reported a first-half net loss attributable to owners of £591 million ($937 million) and appointed Gavin Darby, who previously worked at Vodafone as its new CEO. The firm also suspended future dividends.

Shares of Finmeccanica SpA slid after the defense company reported a bigger-than-expected nine-month net loss and said it will sell assets. It also forecast a full-year adjusted loss before interest and taxes of around €200 million and cancelled its dividend for 2011.

Shares of Credit Suisse fell after Moody’s placed the bank’s long-term credit ratings on review for a possible downgrade.

Shares of UBS dropped after the Swiss bank said that Sergio Ermotti has been appointed group CEO, a position he has held on an interim basis since September.

Shares of Swedish-based Electrolux AB slumped after the household-appliance maker said it would make cost cuts to the tune of 5.1 billion Swedish kronor ($756 million) as it battles falling demand in North America and Europe as well as rising costs for raw materials.

However, shares of Swedish clothing retailer Hennes & Mauritz AB gained after it said October group sales including value-added tax rose 8% in local currencies. Same-store sales fell 2%.

Shares of Burberry fell even though the luxury-goods retailer said six-month adjusted profit before tax and special items rose 26% to £161.6 million. Burberry’s shares have rallied almost 20% year-to-date.