Betting on bazooka!

The only courage that matters is the kind that gets you from one moment to the next. - Mignon McLaughlin.

Every moment seems to be bringing new promises and often new disappointments. For now Europe continues to hog the limelight amid optimism that leaders from the region will be able to chalk out a wide-ranging plan to tackle the long-running credit crisis at a summit scheduled for Dec. 9. In other words, investors are expecting a financial ‘bazooka’ that will combine the resources of an existing bailout fund with one that is planned for next year.



The December rally that was building up nicely was interrupted by a stark warning by S&P. The ratings firm says that it could downgrade the whole of the eurozone if a credible solution remains elusive.

Germany and France have agreed on treaty changes to enable a tighter fiscal union among euro area members.

European officials are reportedly discussing the possibility of significantly boosting the region's ability to fight the debt crisis by operating two bailout funds instead of just one. Operating the European Stability Mechanism in combination with the 440 billion-euro ($590 billion) temporary fund next year would potentially boost Europe’s anti-crisis resources to 940 billion euros. Negotiations are underway over pairing the two, according to reports.

Asian stocks and the euro are holding firm this morning. US stocks were resilient. As a result, the opening in our markets is likely to be positive. Back home, all eyes will be on the Parliament. The MPs should be able to resume the legislative agenda after the Government put FDI in retail issue on the backburner.

Possibility of a correction extending beyond 4978 remains unlikely. We advocate caution ~5063 which corresponds to the 50% retracement of entire decline from 5400 to 4638.

FIIs were net buyers of Rs 1.47bn (provisional) in the cash segment on Monday, according to NSE data. The domestic institutional institutions (DIIs) were net buyers of Rs 376.7mn on the same day.

The foreign funds were net sellers of Rs 7.35bn in the F&O segment on Monday, NSE data shows.

FIIs were net buyers at Rs 7.12bn in the cash segment on Friday (Dec. 2), according to SEBI web site.

Global Data Watch: UK manufacturing production, UK industrial production, Germany's industrial production and US mortgage applications.

The Australian economy grew by 1% in the July-September quarter, beating the consensus forecast of economists, as consumer spending and business investments held firm amid a downturn in the US and eurozone. GDP expanded by a revised 1.4% in the previous three months.

US Treasury Secretary Timothy Geithner yesterday backed a German-French push for closer European cooperation, urging policy makers to work with central banks to erect a stronger firewall to end the crisis. He welcomed progress toward a fiscal compact for the euro zone.

The ECB is likely to reduce its benchmark rate to 1% from 1.25% on Dec. 8, according to economists.