When you can't have what you want, it's time to start wanting what you have.
What we have is Dhoni & Co. in fine touch. What we want is bulls to be in better form. After hitting the year’s high in mid-October, the market has turned turtle. Though the Nifty did make a new high recently, it has since retraced back to sub-5100 level. The broad range for the Nifty is expected to be 4900-5200 and the overall market trend will remain choppy.
Today again we expect a soft opening with US markets in the red and a flat finish in Europe. Asian markets are mixed. We don’t expect any major move (on either side) till a big influential event takes place. So, keep your eyes and ears open.
The immediate event to keep track of is today’s outcome of the Fed meeting. It’s a no-brainer that the Fed will keep rates steady. What the markets are keenly awaiting is some hints on its ‘exit’ strategy. Back home, the RBI is expected to reverse its easy money policy. It may opt to do it earlier than its scheduled January-end meeting.
Bank shares may do well on global media reports that the new global capital-adequacy rules for large banks may be delayed by at least a decade during a "transition period." According to a Japanese news report on Wednesday, the Swiss-based Basel Committee on Banking Supervision will stick to its plan to gradually introduce the new, stricter capital standards starting in 2012, but will establish a transition period of 10-20 years. The proposed changes include raising the current 8% minimum capital ratio and focusing on a narrower definition of core capital, the report said.
Among the other stocks to watch out for are: RIL, Cipla, DLF, Orchid Chemicals, Idea and Airlines.
FIIs were net sellers in the cash segment on Tuesday at Rs61.4mn on a provisional basis. The local funds were net buyers of Rs38.9mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs10.80bn. FIIs were net buyers of Rs1.74bn in the cash segment on Monday. FIIs' net investments in Indian stocks this year have crossed $16bn.
US stocks closed in the red after bank shares led a late-session selloff, breaking Wall Street's four-session wining streak, as investors contemplated mixed reports on inflation and manufacturing. The mood was also cautious as the two-day Federal Reserve policy meeting kicked off and the dollar remained firm.
The Dow Jones Industrial Average fell 49 points, or 0.5%, to 10,452.00. The S&P 500 index lost 6 points, or 0.6%, to 1,107.93. The Nasdaq Composite index slipped 11 points, or 0.5%, to 2,201.05.
US stocks had gained on Monday, with the Dow and S&P 500 ending at the highest levels since October 2008 and the Nasdaq closing at the highest point since September 2008. The advance came after Citigroup said it will repay its government bailout funds and Dubai said it received $10 billion to cover its debt, easing default worries.
The weak dollar also helped on Monday, lifting commodity shares and the stocks of companies that do a lot of business overseas. But the dollar gained on Tuesday as concerns about debt-ridden Greece caused investors to pull money out of the euro and put it in the dollar, pressuring stocks.
Stocks rallied for more than nine months off the March lows, with the S&P 500 having gained nearly 65% as of Monday's close. But in the last couple of weeks the advance has lost some steam and trading volume too has been much lighter.
Investors are still somewhat skeptical about the global economic recovery and the stock market rally worldwide and they continue to hoard cash. This push and pull is likely to keep stocks pretty rangebound for the time being.
The last Fed policy meeting of the year began on Tuesday with a decision on interest rates due out on Wednesday. The US central bankers are widely expected to hold the fed funds rate, a key overnight bank lending rate, unchanged at historic lows near zero, where the rate has stood for a year. But the policy statement could provide hints as to when the Fed plans to raise interest rates, either next year or in 2011.
In the day's economic reports wholesale prices rose more than expected last month, according to the Commerce Department. The Producer Price Index (PPI) rose 1.8% in November after rising 0.3% previously. Economists thought it would climb 0.8%. The so-called core PPI, which strips out food and energy costs, rose 0.5% versus forecasts for an increase of 0.2%. Core PPI was up 0.3% in the previous month.
The Empire Manufacturing index, a measure of manufacturing in the New York area, slumped to 2.55 in December from 23.51 in November, missing forecasts for a rise to 24.
In other manufacturing news, the Federal Reserve said that November capacity utilization rose to 71.3% from 70.6% in October. Economists thought it would rise to 71.1%. Industrial production rose 0.8% in November after holding steady in October. Economists thought it would climb 0.5%.
Wells Fargo said it sold $10.65 billion in stock on Tuesday to help pay back $25 billion in government bailout money, adding to the list of institutions that are looking to give back funds provided to them during the financial crisis.
Best Buy reported better-than-expected quarterly profit before the start of trading. The electronics retailer also lifted its current-quarter revenue and earnings forecast.
Boeing made the first test flight of its 787 Dreamliner Tuesday, nearly two-and-a-half years after the more fuel-efficient plane was due to fly.
General Motors said that it will pay off a $6.7 billion federal loan by June, ahead of its deadline for repayment under terms of the bailout.
COMEX gold for February delivery fell 80 cents to settle at $1,123 an ounce. Gold closed at an all-time high of $1,218.30 an ounce earlier this month.
US light crude oil for January delivery rose $1.18 to settle at $70.69 a barrel on the New York Mercantile Exchange.
Treasury prices fell, raising the yield on the 10-year note to 3.6% from 3.55% late on Monday.
Debt worries continued to weigh on the banking sector in Europe, though the broader market finished broadly unmoved as traders moved to the sidelines before a key US interest-rate decision.
The pan-European Dow Jones Stoxx 600 index closed virtually unmoved at 247.05 and the euro hit a ten-week low against the dollar on Tuesday amid fresh worries about the health of the European banking sector.
Germany's DAX index rose 0.2% to 5,811.34 and the French CAC-40 index added 0.1% to 3,834.09 while the UK's FTSE 100 index fell 0.6% to 5,285.77.
Indian markets have been struggling for specific direction in the past few weeks and Monday was no different. The benchmark indices yet again ended on a flat note as markets continued to consolidate.
A flat start was followed by strong momentum after media reports flashed that Abu Dhabi agreed to help Dubai with a US$10bn injection, of which US$4.1bn was allocated to Dubai World to pay immediate obligations. Markets managed to hold on to their gains despite inflation jumped to 4.78% in November led by rising prices of food items as against 1.34% in October, 2009.
However, markets slumped sharply in the late trades after reports stated that Reliance Industries was concerned about LyondellBasell’s high debt, with the company’s lenders having hiked interest rates to about 12%.
The BSE Sensex ended marginally lower by 21 points at 17,097 after touching a high of 17,275 and a low of 17,048. The index opened at 17,118 against the previous close of 17,119. The NSE Nifty slipped 11 points to end at 5,105.
In Asia, the Nikkei in Japan ended flat, while Australia's S&P/ASX ended higher by 0.4%. Shanghai SE Composite was up 1.7% and Hang Seng index in Hong Kong was up 0.8%.
In Europe, stocks were trading higher. The DAX in Germany was up 1% and the CAC 40 index in France was up 0.7%. The FTSE in the UK was up 0.9%.
Coming back to India, among the BSE sectoral indices, the BSE IT index was the top gainer, adding 1.1%, followed by the Capital Goods index that was up 1% and the BSE Auto index was up 0.8%.
Major losers were BSE FMCG index down 1.4% and BSE Consumer Durables index down 1.8%.
The BSE Mid-Cap index ended marginally lower by 0.4% while the BSE Small-Cap index was down 0.5%.
Among the 30-components of Sensex, 17 stocks ended in the red and 13 ended in the positive terrain. Bharti Airtel, Hindustan Unilever, HDFC Bank, ITC and ICICI Bank were among the top laggards.
On the other hand, among the major gainers were ACC, Grasim, Wipro, BHEL and Infosys.
Outside the frontline indices, the big losers in the broader market were OBC, IVRCL Infra, Shriram Transport, Koutons, Titan and United Spirits. On the other hand, gainers included MMTC, Gujarat NRE, Nagarjuna Const and Madras Cement.
DLF announced that the board of directors of the company decided to meet on December 15, 2009, to consider integration of Caraf Builders & Constructions Pvt. together with its subsidiaries with DLF Cyber City Developers Ltd. engaged in the business of development and leasing of commercial properties.
Shares of DLF ended flat at Rs382. The scrip opened at Rs384 it touched an intra-day high of Rs386 and a low of Rs378 and recorded volumes of over 1.8mn shares on BSE.
Shares of BHEL advanced by 2% to end at Rs2409 after reports stated that the company’s unit plans to consider four-five companies as candidates for acquisition.
We are looking at investing Rs2.5-4bn for the acquisition, executive director, A V Krishnan was quoted as saying.
Last year, the unit acquired Bharat Heavy Plates and Vessels Ltd in Visakhapatnam, another public sector unit. "We are looking at a 100% take over and once it is acquired, it will become a subsidiary of BHEL," he added.
Reports also stated that the company is in talks with L&T and Pipavav Shipyard to jointly build off-shore oil rigs. The company had earlier decided to quit its deep water oil rig business as it was unable to find a suitable partner due to investment constraints, added reports.
RCom is reportedly planning to raise US$3bn in cash by selling its Flag and US Network business. Reports also added that the company’s spokesperson denied it as market rumors and speculations.
Shares of RCom erased early gains and ended lower by 1.3% at Rs181. The scrip opened at Rs181 it touched an intra-day high of Rs186.5 and a low of Rs180 and recorded volumes of over 2.3mn shares on BSE.
Suven Life announced that it secured 2 product patents from the Canadian Intellectual Property Office. Shares of Suven Life were locked at 5% upper circuit at Rs29.85. The scrip opened at Rs28.60 it touched an intra-day high of Rs29.85 and a low of Rs28.05 and has recorded volumes of over 0.11mn shares on BSE.
Parsvnath Developers surged by over 3% to end at Rs124 after the company announced that it will develop a residential site in Gurgaon, south of New Delhi, with SUN-Apollo, which will invest Rs750mn for a 50% stake in the venture. The scrip opened at Rs122 it touched an intra-day high of Rs129 and a low of Rs119 and recorded volumes of over 2mn shares on BSE.