A welcome change!

Life is a series of natural and spontaneous changes. Don't resist them - that only creates sorrow. Let reality be reality. Let things flow naturally forward….- Lao Tzu.

It’s been raining gains on every street for few days. News that France and Germany have worked out a plan to deal with the region’s debt problems, including recapitalisation of banks has done the trick so far. The details of the proposed plan will be out by the end of this month.
The plan will be presented to world leaders at the G20 meeting in Cannes Nov. 3 and 4. Some people are still a bit skeptical about the much-hyped program. Understandable, as a number of measures taken earlier haven’t worked well.



Markets have a mind of their own and tend to move on sentiment, which, for the moment is positive. So, ride the wave as long as it lasts. Don’t plough fresh money as yet. The opening looks good again as Asian markets are up smartly. US stock indices rallied ~3% each. European benchmarks too advanced. The euro climbed versus the dollar. Commodities also joined in the party.

Both CBOE VIX and India VIX are down substantially. This bodes well for stocks. What’s also good is that FII flows have been encouraging in the past couple of sessions. The Nifty could rise bit more from here on, provided we don’t get any nasty surprises from IIP data, Infosys or Inflation numbers. Currently, the Nifty is placed at resistance of falling trendline, and only a close above 5060 would confirm a trend reversal.

FIIs were net buyers of Rs 2.11bn (provisional) in the cash segment on Monday, according to NSE data. The domestic institutional institutions (DIIs) were net sellers at Rs 371.3mn on the same day.

FIIs were net buyers of Rs 4.69bn (provisional) in the F&O segment, according to NSE web site.

The foreign funds were net buyers of Rs 4.91bn on Friday, as per final SEBI data.

Results Today: Aanjaneya Lifecare, CMC and Goa Carbon.

Telecom stocks will be in focus after the release of the draft New Telecom Policy 2011. Maruti will continue to be in the spotlight as the labour unrest at its Manesar factory shows no sign of easing.

State Bank of India (SBI) is likely to raise Rs50bn through a rights issue of shares by December.

The Foreign Investment Promotion Board (FIPB) will reportedly start scrutinising takeovers by foreign players in the pharmaceutical sector - for the next six months.

Credit rating agency, CRISIL, has lowered India's GDP growth forecast for FY12 to 7.6% from the earlier estimated 7.7-8.0%.

The Government's excise duty collections fell for the first time in 16 months in September.

Asian Markets on Tuesday:

Asian markets were trading mostly higher on Tuesday as investors cheered news that Germany and France have agreed on a program to resolve the region's long-standing credit crisis. The plan, that includes bank recapitalisation, will be unveiled at a G-20 meeting early next month.

Stocks across the globe had rallied last week after central banks in Europe launched fresh measures to prevent another recession and keep the region's banking system liquid amid a worsening sovereign debt crisis.

The MSCI Asia Pacific Index was up 2.2% at 11:19 a.m. in Tokyo. More than nine shares rose for every one that fell on MSCI’s Asia Pacific Index. It has gained nearly 6% in the past three days.

Markets in Japan and Taiwan were shut for a public holiday on Monday.

The Nikkei in Tokyo was up ~2% at 8,776. The Hang Seng in Hong Kong was up ~3.3% at 18,297 while the Shanghai Composite index in China was up ~1.4% at 2,377. The Kospi in South Korea rose ~2.15% at 1,804 while the Taiex in Taiwan gained 2.2% at 7,374.

The Straits Times in Singapore was up ~1.9% at 2,718. The S&P/ASX 200 index in Australia rose ~0.5% at 4,220 while the NZX 50 index in New Zealand was up ~0.5% at 3,389.

German Chancellor Angela Merkel and French President Nicolas Sarkozy reached an agreement to strengthen the European banking system. However, details of the plan aren’t likely to be available until the end of the month.

Banking shares soared in Hong Kong after China’s state-run Central Huijin Investment Ltd. bought shares in the country’s big four banks in what could be an effort to stabilize the financial system.

Central Huijin Investment began buying shares in the lenders to bolster valuations that fell below levels reached during the global financial crisis. The unit of China Investment Corp. (CIC) said it will continue with “related market operations” after a slump in bank stocks.

The euro rallied yesterday after leaders of France and Germany pledged to deliver a plan to stem the debt by Nov. 3. But reports say that the ECB opposes Germany’s push to rewrite the euro area’s 12 week-old-rescue plan.

Merkel has said that Europe’s bailout fund could be used to inject more funds into banks. The ECB is concerned that it would erode the facility’s ability to start buying the bonds of debt-strapped nations.

The won climbed 0.7% to 1,162.85 per dollar, set for the strongest level since Sept. 21. The ringgit strengthened for a sixth day.

Oil traded near the highest price in two weeks on signs that crude exports from Kuwait and Nigeria may be disrupted.

A strike may block some oil shipments from Kuwait, a union official said, while Royal Dutch Shell's Nigerian venture declared force majeure on exports of Forcados crude because of sabotage.

US markets on Monday:

US equity benchmarks surged on Monday after Germany and France agreed to protect the European banks from the region's debt crisis, raising hopes that policymakers could retched up measures to quell the fiscal mess.

The Dow Jones Industrial Average rose 330.06 points, or 2.97%, to end at 11,433.18, its biggest one-day point and percentage gain since Aug. 11.

The Standard & Poor’s 500 Index added 39.43 points, or 3.4%, to close at 1,194.89, its best one-day rise since Aug. 23.

The Nasdaq Composite Index advanced 86.7 points, or 3.5%, to finish at 2,566.05, also its best one-day gain since Aug. 23.

The rally was broad but on moderate volume.

On the New York Stock Exchange, there were about 9 advancing companies for every decliner. Volume of advancing shares made up 96% of trades.

New York Stock Exchange volume totaled 888 million shares and NYSE composite volume was around 3.95 billion, under the 30-day average.

All 30 Dow components ended higher.

All 10 sub-sectors of the S&P 500 also were in positive territory, led by financial stocks and then energy firms.

The dollar lost ground against the British pound and Japanese yen.

Oil for November delivery rose $2.43 to $85.41 a barrel.

Gold futures for December delivery added $35 to $1,670.80 an ounce.

The bond market is closed for Columbus Day.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said over the weekend that they will reveal plans for a banking-sector recapitalization by early November.

The assurances from the European leaders raised hope that officials will take bigger steps to control the region’s sovereign-debt crisis, increasing the appeal of riskier assets like stocks, commodities and the euro.

The plan will be presented to world leaders at the G20 meeting in Cannes Nov. 3 and 4.

Meanwhile, troubled Franco-Belgian bank Dexia became the first casualty of the eurozone's money woes. On Monday, the bank accepted a €90 billion joint bailout from France, Belgium and Luxembourg.

Apple shares gained after saying that pre-orders for its new iPhone 4S set a record last week with more than one million units snatched up online in the first 24 hours. AT&T said late on Friday that it has seen extraordinary demand for the iPhone 4S.

Sprint's stock tumbled after six banks downgraded the stock. Sprint said that it is running out of money and may need to draw down its credit line or raise more capital to fund itself.

Netflix shares fell after an initial rally as the company ditched a plan announced last month to spin off its DVD streaming business and rename it Qwikster.

Shares of Yahoo climbed amid continued market talk of a possible buyout of the struggling company. Last week, the stock had risen on rumours that Microsoft and Chinese e-commerce giant Alibaba were considering a bid for Yahoo.

Reports also suggested that the company could also be sold to a private-equity firm.

Wall Street investors will also be looking ahead to earnings reports later in the week. Third-quarter results season unofficially gets underway after Tuesday’s close with figures from aluminium giant Alcoa.

Of the 29 companies in the S&P 500 index that have already posted their results for the third quarter, 72% have reported earnings above analysts’ expectations. The estimated earnings growth rate for the S&P 500 for the third quarter is 12.7% over the year-ago period.

European Markets on Monday:

European equity indices closed higher on Monday, buoyed by a pledge from German and French leaders to unveil a comprehensive plan to deal with the region's debt crisis and recapitalize the euro-zone banks.

The pan-European Stoxx 600 index gained 1.7% to close at 235.94.

The German DAX 30 index rose 3% to end at 5,847.29. The French CAC 40 index advanced 2.1% to settle at 3,161.47. The UK’s FTSE 100 index was up 1.8% at 5,399.00.

French President Nicolas Sarkozy and German Chancellor Angela Merkel said on Sunday in Berlin that they will unveil a package of measures to respond to the crisis by the end of the month, but offered few details.

Greek bank shares tumbled as the Bank of Greece announced it had activated the Financial Stability Fund to save small lender Proton Bank, effectively nationalizing it. The ASE Composite index in Athens lost 0.6%.

A French newspaper reported that BNP Paribas and Societe Generale would seek 7 billion euros ($9.5 billion) and €3 to €4 billion, respectively, to shore up their capital.

Societe Generale denied the report and reiterated plans for a Basel 3 core tier one ratio well above 9% by the end of 2013 without a capital increase. BNP Paribas also denied the report.

Shares of BNP Paribas erased early weakness to rise 3%, while Societe Generale gained 1.2%.

In Vienna, shares of Erste Group Bank AG sank more than 9% after the Austrian lender said it will report a €920 million to €970 million loss due to writedowns in Hungary and Romania. The group has also cut its exposure to Greece, Portugal, Spain, Ireland and Italy to €600 million as of September 30, from €1.9 billion at the end of 2010.

Shares of another Austrian bank, Raiffeisen Bank International AG, fell nearly 5%. The bank said in a statement that it has low exposure to peripheral euro-zone countries, goodwill of €3.5 million for Hungary and no goodwill booked for Romania.

Shares of KBC Group NV initially stumbled after the firm said it would sell its Luxembourg-based private banking unit BL European Private Bankers to Precision Capital for €1.05 billion. KBC said that the sale will lower its third-quarter earnings by €400 million, while releasing €700 million in capital. KBC shares ended 0.8% higher.

Dexia SA said that its board approved a rescue deal that includes the sale of its Belgian banking division to the Belgian state for €4 billion and a 10-year funding guarantee up to a maximum of €90 billion. Shares fell 4.7% in Belgium.

Shares of Adidas AG rose 3.7% after the company said it expects group sales in Russia and the Commonwealth of Independent States to exceed €1 billion by 2013 and grow in double digits annually until 2015.

Metro AG dropped after CEO Eckhard Cordes said that he would not renew his contract which ends in 2012.

Shares of Swedish truck maker Scania AB fell in Stockholm after it said it will lower production rates at its European units starting in November, citing a deceleration in demand in various markets.