Life is a succession of lessons which must be lived to be understood.
The bulls may raise a toast that they have lived to fight another year. Given the lessons from the past, the bulls may look at lessening their holdings temporarily. Today, we expect a weak opening with most regional markets flashing red signs. Results will be the next big event, both here and overseas. Another quarter of outperformance will set the stage for a brief rally. There could be some fireworks this Diwali unless some party poopers pop up.
The financial world was hit by a massive earthquake a year ago in the form of the collapse of big financial houses. It turned the seemingly invincible US capitalism upside down, and left a trail of destruction. The collateral damage spread across the globe with disastrous consequences. Though Asia was also badly affected, it mostly emerged unscathed, barring Japan.
Overall, the global situation has stopped worsening and there are pockets where one can spot a few greenshoots. But, the recovery will be slow before a more sustained rebound. Strong liquidity could still power the market higher, but the gains will not come easy. Don’t accelerate too much lest you lose control of the steering.
The intermediate trend is up, but it will not be a one-way move up as the indices have more than doubled. While 4350 looks quite improbable as of now, support could kick in at 4650-4700 or even at 4760-4790 before that. On the way up, the Nifty could go as high as 5200-5300 in a few weeks.
Over the medium-to long-term, one has to see how the report cards of India Inc. and Global Inc. turn out and how regulators go about implementing their so-called 'exit strategies' to reverse the huge stimulus measures. Stick to a stock centric approach. Traders and investors alike may tread with caution and will react to daily dose of news.
FIIs were net buyers of Rs2.28bn in the cash segment on Friday on a provisional basis while the local funds pulled out Rs2.94bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs864.3mn. On Thursday, FIIs were net buyers of Rs5.75bn in the cash segment. With this, their net investments in Indian stocks this year have crossed $8.7bn. Mutual Funds were net sellers of Rs3.43bn on Thursday.
US stocks slipped on Friday as investors chose to take some money off the table after sending the major indexes to 11-month highs in the previous session. Weak oil prices weighed on the influential commodities sector.
Concerns that the recent rally has outpaced the prospects for earnings overshadowed higher-than-estimated consumer confidence and profit at FedEx Corp.
The Dow Jones Industrial Average lost 21 points, or 0.2%, to 9,605.41. The S&P 500 index finished nearly unchanged at 1,042.73. Both the Dow and S&P 500 ended the previous session at their highest points since Oct. 6.
The Nasdaq Composite index fell 3 points, or 0.2%, after ending the previous session at its highest point since Sept. 26. All the three major indexes rose for the week.
Stock declines were broad based, with 21 of 30 Dow issues falling.
The weak dollar, higher commodity prices and investor fears of missing out on a rally have all contributed to the recent rally. However, this week's advance was fueled by light trading volume, pointing to the lack of conviction among investors.
Investors have also been pulling money out of stocks and funds and putting it into cash or bonds. Tracker Trim Tabs said equity mutual funds and ETFs are on track to post the first monthly outflows since March.
Since bottoming March 9 at a more than 12-year low, the S&P 500 has risen 54%.
Meanwhile, the CBOE Volatility index, the VIX, Wall Street's fear gauge, closed at the lowest point since Sept. 8 of last year. Typically, the VIX moves inversely to the direction of stocks.
Package delivery firm FedEx, often seen as a proxy for the economy, lifted its fiscal first- and second-quarter earnings forecasts due to cost cutting and stronger international shipments. FedEx said it expects to earn 58 cents per share in the first quarter versus its earlier forecast for a profit of 44 cents per share. The company expects to earn between 65 cents and 95 cents per share in the second quarter versus its earlier prediction of 70 cents. FedEx shares gained 6.4%.
The University of Michigan's initial reading on consumer sentiment rose to 70.2 in September from 65.7 in late August. That topped the 67.5 reading economists were expecting and is the highest reading since June.
The report showed that only 16% of consumers said their finances had improved, the smallest percentage on record since the university first asked the question in 1946. Only 25% of consumers said they expected income gains over the next year.
In other economic news, the Commerce Department reported that wholesale inventories fell 1.4% in July after falling a revised 2.1% in June. Economists forecast inventories would fall by 1%. It was the 11th consecutive month investors dropped.
Additionally, the Bureau of Labor Statistics said that August import prices rose 2% versus forecasts for a rise of 1%. Import prices excluding oil rose 0.4% after falling 0.2% in July. Export prices rose 0.7%.
The August Treasury budget was released in the afternoon. The deficit grew by US$111.4 billion in August versus forecasts for a deficit of US$139.5 billion. The deficit for the first 11 months of the fiscal year stood at US$1.38 trillion.
Weakness in dollar and optimism over a global economic recovery have lifted commodity prices. But oil prices reversed course on Friday. US light crude oil for October delivery fell US$2.65 to settle at US$69.29 a barrel on the New York Mercantile Exchange.
The dollar continued its slide against other major currencies, falling to multi-month lows versus the euro and the Japanese yen.
COMEX gold for December delivery rose US$9.60 to settle at a record US$1,006.40 an ounce, after topping the key US$1,000 level during the day for the past three sessions.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.31% from 3.35% late on Thursday. Treasury saw strong demand for its auction of US$32 billion in long-term bonds earlier this week.
Tuesday marks the first anniversary of the collapse of Lehman Brothers, an event seen as exacerbating the recession and pushing the economy into crisis mode. Ahead of that, President Obama will speak Monday about the steps his administration has taken to "bring the economy back from the brink" and make sure a collapse at that level doesn't happen again.
European shares closed higher for the seventh straight session on Friday, with miners and automakers pacing the advance to a fresh 11-month high.
After a modest rise on Thursday, the pan-European Dow Jones Stoxx 600 index finished with a gain of 0.5% to 241.78 for the session and a rise of over 3% on the week. Every Stoxx 600 sector but telecoms traded higher.
The UK's FTSE 100 index was up 0.5% to 5,011.47, while the French CAC-40 index added 0.8% to 3,734.89 and the German DAX index rose 0.5% to 5,624.02.
The BSE Sensex gained 57 points or 0.4% at 16,274 after touching a high of 16,337 and a low of 16,130. The index opened at 16,254 against the previous close of 16,216. The NSE Nifty gained 10 points to shut shop at 4,829.
In Asia, the Nikkei in Japan slipped by 0.7% at 10,444 while Australia's S&P/ASX ended higher by 0.6% at 4,596. The Hang Seng index in Hong Kong gained 0.5% at 21,161. However, Shanghai SE Composite in China gained by 2.2% at 2,989.
In Europe, stocks were in the green. The FTSE in the UK was up 0.7%, The DAX in Germany was up 0.62% and the CAC 40 index in France was up 0.9%.
Coming back to India, among the BSE sectoral indices, the Consumer Durables index was the top gainer, gaining 2%, followed by the PSU index that was up 1.8%. The BSE Bankex index up 1.6% and the BSE IT index was up 1.2%.
However, BSE Realty index was down 1.5% and BSE FMCG index was down 1%. The BSE Mid-Cap index fell 0.2% and the BSE Small-Cap index fell by 0.4%.
Among the 30-components of Sensex, 20 stocks ended in the red and 10 ended in the positive terrain. Among the major losers were Sterlite, DLF, ACC, HUL and JP Associates.
On the other hand, Hindalco, SBI, ICICI Bank and Wipro were among the major gainers.
Outside the frontline indices, the big loses in the broader market were Spice Tele, Sintex Ind, REC, Bhushan Steel and REI Agro. On the other hand, gainers included MMTC, Godrej industries, Central Bank, Bosch and P&G.
The top gainers in the IT sector were TCS (up 5.3%), Infosys (up 3%) and HCL Tech (up 2.6%).
The top losers were Patni Computer (down 6.3%), Financial Tech (down 5.3%), Mphasis (down 4.8%), Oracle Financial (down 2.7%) and Sasken Comm (down 1.2%).
The BSE Consumer Index: The top gainers in the consumer durables were Blue Star (up 3.8%), Titan Inds (up 1.1%) and Mirc Electronics (up 0.6%).
The top losers in consumer durables space were Samtel Color (down 3.1%) and Su-Raj Diamonds (down 1.1%)