Bulls hope for indomitable spirit!
Death comes to all. But great achievements build a monument.
The assassination of former Prime Minister Benazir Bhutto, coupled with a few negative news has hurt global markets. This could well cloud the outlook for the Indian market today, at least at start. Equity benchmarks across key global markets, except Europe, have reacted to the fresh political upheaval in Pakistan. So, we expect a similar knee-jerk reaction in India as well. Given that the market has had a good rally over the past few days and with the main indices close to their previous all-time highs, bears were waiting for an excuse. But as we mentioned yesterday, remember a Santa Claus rally was something we were into. On the birth day of Dhirubhai Ambani, bulls might pray that the indomitable spirit may guide them to stage a comeback. And as Rabindranath Tagore says, taking shelter in the dead is death itself, and only taking all the risk of life to the fullest extent is living.
The near term outlook is positive though one cannot rule out the possibility of a small correction. The settlement in the F&O segment has been pretty good, with about 79% rollover in Nifty December futures. This is one of the highest figures in recent memory. In November the rollover in Nifty futures was around 75%. According to reports, traders and investors have created long positions in the Nifty January futures, which are quoting at a 40-point premium to the spot Nifty. Most signs from the derivative side are bullish, though there may be some choppiness in the next few days ahead of next month's quarterly results, and key events like the Fed meeting and the RBI policy review.
US shares slumped on Thursday amid renewed geo-political concerns after former Pakistani Prime Minister Benazir Bhutto was killed in a suspected suicide attack in Rawalpindi, Pakistan. Wall Street was also hurt by a slew of economic reports that reinforced concerns about the health of the world's biggest economy.
Reports on durable goods and unemployment heightened worries that growth is slowing in the US. Citigroup fell to a five-year low after Goldman Sachs analyst William F. Tanona said it will cut its 54-cent dividend to preserve capital amid the current turmoil in credit markets.
The Standard & Poor's 500 Index lost 21 points, or 1.4%, to 1,476.27. The Dow Jones Industrial Average dived 192 points, or 1.4%, to 13,359.61. The Nasdaq Composite Index dropped 48 points, or 1.8%, to 2,676.79.
Traded volume was once again unusually low since many Wall Street traders are on an extended Christmas vacation this week. This means that the market's reaction to new developments, good or bad, could be exaggerated.
Market breadth was negative. About seven stocks fell for every one that gained on the New York Stock Exchange.
On the economic front, the US Commerce Department said that factory orders for November came in lower than expected. Meanwhile, the US Labor Department said the number of workers applying for unemployment benefits last week was higher than expected.
Consumer confidence in December was slightly higher than expected, despite concerns about economic instability, according to the Conference Board. Separately, the government's weekly oil inventory report showed a larger-than-expected drop in domestic crude supplies last week.
The reports helped lift bond prices, for the first time in four sessions, as the weak economic outlook drove investors to safe haven investments.
US light crude oil for January delivery rose 11 cents to US$96.73 in New York. COMEX gold for February delivery rose US$2.20 to US$830.80 an ounce. The dollar fell versus the euro and the yen. Treasury prices rose, with the yield on the 10-year note falling to 4.19%, down from 4.28% on Wednesday.
European shares managed modest gains as investors bought producers and dumped travel firms on the news of Bhutto's assassination and a sharper-than-forecast drop in US oil inventories. The pan-European Stoxx 600 index ended with a rise of 0.2% to 365.08. Germany's DAX 30 rose by 0.5% to 8,038.60 while the French CAC-40 moved up 0.2% to 5,627.48 and the UK's FTSE 100 gained 0.3% at 6,497.80.
In the emerging markets, the scene was mixed. The Bovespa in Brazil shed 0.8% at 63,774 while the IPC index in Mexico was down 1.2% at 29,642. The RTS index in Russia rose 0.4% at 2291 and the ISE National-30 index in Turkey dropped 0.4% at 70,253.
Asian markets were down in line with the weakness across world markets. Toyota led declines among exporters after US durable goods orders rose less than forecast last month, while jobless claims unexpectedly increased.
Mitsubishi UFJ Financial Group led a drop among lenders after Goldman Sachs said that top US banks may have additional writedowns linked to the collapse of the subprime-mortgage market.
The MSCI Asia Pacific Index lost 0.7% at 155.94 as of 10:11 a.m. in Tokyo, its steepest decline since Dec. 17 and adding to a 3.8% drop this quarter. The regional index is up 11% this year, on course for its worst annual gain in five years.
The Nikkei in Tokyo shed 257 points or 1.65% at 15,307. The benchmark Japanese index has lost 11% in the year 2007, marking its first annual decline in five years. The Hang Seng in Hong Kong was down 339 points or 1.2% at 27,508.
The Kospi in Seoul was down 0.5%, while the Straits Times in Singapore fell 0.65%. The Shanghai Composite in China was flat and the Taiex in Taiwan too was nearly unchanged. All other Asian benchmarks dropped. |
