Take a pause

"Now and then it's good to pause in our pursuit of happiness and just be happy." - Guillaume Apollinaire It’s been raining gains and good news all around. The Sensex has gained ~ 20% this year and has perched itself to a 14-month high. Brokerages are rushing to raise Sensex targets anything between 19K and 23K. It’s a holiday truncated week and we could see some profits being booked today. Future sustenance of any rally will depend on broader participation from mid caps and small caps with 5450 emerging as new line of defense. The outlook is flat at start and market participants may like to take a cautious approach. The RBI has given a slight sentiment booster by cutting CRR. Key rates were left unchanged as it battles inflation. With government’s big bang actions to stimulate growth, some monetary easing will be needed sooner than later. The relentless rally is seeing sound stocks going off the radar as riskier assets are sought now. That explains the fall in FMCG and select IT counters. Finance Minister P. Chidambaram has ruled out any rollback and affirms that the government faces no threat. He has hinted at more measures to boost economy coming in from the Department of Revenue, Disinvestment and SEBI. He played down rating worries saying Government policies are not to get rating by credit rating agencies. Asian shares fell from four-month highs. Investors are keenly watching if Spain will request a bailout. US indices closed in the red. Factory activity in New York state contracted for a second month in a row in September. The Empire State "business conditions" index fell to its lowest level in nearly 3-1/2 years. The minutes of the Reserve Bank of Australia's September meeting are due later today. FII inflow continues. Net foreign institutional investor investment into Indian stocks has been $13.6bn and the past two days have seen FIIs bring in ~$1 billion. The FIIs were net buyers of Rs.22.52bn in the cash segment on Monday while the domestic institutional investors (DIIs) were net sellers of Rs.8.38bn, as per the provisional figures released by the NSE. The foreign funds were net buyers of Rs31.34bn in the cash segment on Friday, according to the SEBI figures. In other news in the media: Tata Motors Ltd’s global vehicle sales, including that of subsidiary Jaguar Land Rover, rose 13% in August from a year earlier. The company sold 97,225 units during the month. (BS) Reliance Industries Ltd has sought tripling of its KG-D6 gas price from April 1, 2014 after the current below market rate of $4.205 per mmBtu expires. (BL) Reliance Power said its 4,000-MW Sasan ultra mega power project in Madhya Pradesh has been connected to the national grid. (BL) The government said it will give three-month time to foreign companies to form their Indian joint venture, with not more than 74% foreign equity, in case they win a licence to offer telecom services in the upcoming spectrum auction. (ET) Engineering exports declined by 9.7% to US$4.67bn in August 2012 due to sluggish demand in markets like the US and Europe. (ET) U.S. crude futures, which soared on the Fed's announcement last week, fell more than 2% Monday as the Fed-related boost appeared to fade, U.S. October crude oil futures slid to $96.62 a barrel. Apple Inc booked orders for over two million iPhone 5 models in the first 24 hours. Apple shares came close to $700 in regular trading. Billionaire investor Warren Buffett says he has completed treatment for a mild case of prostate cancer, according to a published report. The Obama administration filed a complaint Monday with the World Trade Organization, alleging that China has illegally subsidized automotive exports and undercut American suppliers.