Tail-end recoverySupport at 2694

The markets started the day on a flat note, slid afterwards
and during afternoon session tanked further into the red.
Though the markets ended in the negative territory, they
managed to trim the losses on the back of buying at lower
levels during the final hours of trade. On the daily chart,
Nifty saw a tail-end recovery from 50% retracement level
(of the rise from 2,252 up to 3,240), which has still kept
the hopes alive in the bulls’ camp. Further, on the hourly
chart, if Nifty clears the hurdle of 20-hourly simple moving
average (HSMA) and 40-hourly exponential moving
average (HEMA) without breaching today’s low of 2,694,
the probability of Nifty going above the neckline of
inverted head and shoulders pattern will increase. On the
daily chart, the momentum indicator has not yet given
any bearish signal. The market breadth was the only sign
of concern as the losing stocks outnumbered the advancing
ones.


On the hourly chart, the momentum indicator KST has
given a positive crossover, which points towards a bullish
scenario in coming sessions. Our short- and mid-term
biases are up for the targets of 3,000 and 3,450
respectively with the short- and mid-term reversal pegged
at 2,650.


Of the 13 sectors of the BSE, except BSE IT, all other
sectors ended in the red with the BSE Realty, BSE Bankex
and BSE CD (consumer durables) leading the fall. Among
the 30 stocks of the Sensex, Wipro (up 5%), ACC (up 4%)
and Maruti Suzuki India (Up 2%) led the pack of gainers.
While HDFC Bank (down 9%) and Reliance Infrastructure
(down 7%) led the pack of losers.

Market showing points of negative sentiments

FRIDAY’S closing levels for the Sensex and Nifty were the lowest in nine trading sessions. The Nifty closed at 2810.35, below its major support level of 2860 on a weekly basis. On the weekly charts, formation of long shadow candle indicates good resistance at 3200-3250 levels, which is also indicated by the 10-week centre moving average. The 28-day RSI (relative strength index) oscillator is currently taking support on its nine-day moving average. A positive or negative signal will be triggered when the RSI breaks down or bounces back from its moving average. The Nifty, which currently is moving in a range between 2800 and 3200, may see rise in volatility if it slips below 2800. It could fall sharply all the way down to 2670-2550 levels. On the upside, it could breach 2920, and 3030 and 3200 are the key levels which the index will have to surpass to form a positive trend. Sentiment indicators like advance-decline ratio indicates negative sentiment. The rise in trading volumes in a falling market also indicates a bearish mood. International markets, which are one of the major influencing factors for our stock markets, are likely to remain volatile. The Dow Jones Industrial Average index, which is moving in a range between 8000 and 9640 for past few weeks, may test the lower range again in the coming week. If Dow breaks below the 8000 level on closing basis, the next major support exists at 7400-7500 range. In the daily Dow Jones chart, technical indicator Stochastic (20, 3, and 3) is just trading above its upward trend line and forming a negative reversal pattern as Stochastic is going up but price is not. Breaching of Stochastic trend line will provide early signal for downward breakout and any bounce from here will face resistance at levels of 8900 and 9300. On weekly basis, all sectoral indices closed on a bearish note and there was no buying interest. Auto, capital goods, consumer durables and metal were the weakest sectors last week and on Friday fresh selling was seen in IT and realty sectors. FMCG and healthcare sectors are likely to perform better than others because of the defensive nature of these industries. Index heavy weights like Reliance Industries, Infosys, Maruti, HDFC and ONGC appear weak on their daily as well as weekly charts. Reliance Industries: The stock has a key support at Rs 1,090. Below this level, it could fall to Rs 1,000 and Rs 920. Only a close above Rs 1,250 will change its short-term trend upwards. ONGC: The stock has broken its 20-day Simple Moving Average and is likely to test Rs 650. HDFC: The stock fell on heavy volumes, indicating more bearishness in the short term. It could test Rs 1,470. Maruti: The stock has breached its long term support level of Rs 550. It could weaken to Rs 500. Infosys Technologies: The stock has been trading at the lower end of the Rs 1,200-1,400 range for the past few days. Any breakout on downside may pull the stock down to Rs 1,100 and then Rs 1,050.

Choppy session Retracing previous rise

Markets started the day on a positive note on the back of
positive global cues. They remained volatile and the
indices oscillated around the previous close all through
the day. At the end of the session, bears won the tug of
war due to which the market ended in the red. On the
hourly chart, Nifty has given a negative crossover of 20-
hourly simple moving average (HSMA) and 40-hourly
exponential moving average (HEMA). However on account
of positive momentum cycle on the daily chart the negative
crossover of 20-HSMA and 40-HEMA will not have a strong
impact and the negative crossover is expected to violate
in the coming sessions. Further Nifty is expected to take
support around 61.8 % retracement level (of the rise from
2,252 to 3,240) at 2,650. On the daily chart, the
momentum indicator KST is still riding its positive
crossover. Market breadth that was dominated by the bulls
slipped under the command of bears at the end of the
session, which is sign of concern.


On the hourly chart, the momentum indicator KST is about
to give a positive crossover. Our short-term bias is revised
up for the target of 3,000 with reversal placed at 2,650.
Our mid-term bias is also still up for the target of 3,450
with reversal placed at 2,650.


All the 13 sectoral indices of the BSE except BSE FMCG
ended in the red with BSE CG, BSE Auto and BSE Metal
leading the fall. Among the 30 stocks of the Sensex, Bharti
Airtel (up 4%) and Reliance Communications (up 3%) led
the pack of gainers. While Tata Motors (down 9%), ACC
(down 9%) and Tata Steel (down 6%) led the pack of losers.

Opec fresh output cut to halt slide

SWELLING fuel stocks and a more than $90 drop in the oil price has driven Opec to call another round of urgent talks that could agree a deep supply cut to try to shore up the market. Since early September, the Organisation of the Petroleum Exporting Countries has already agreed to reduce supply by a total of two million barrels per day (bpd). It could announce a further cut of 1.5 million bpd at talks in Cairo at the end of the month, an Opec delegate said on Friday. “The organisation needs to cut more rather than less — probably in the range of 1.5 million,” the delegate told a news agency, adding “Demand is going down every day along with the price and we don’t want a big stock-build.” A reduction of that size would be deeper than the one million bpd many analysts have said is necessary, but the organisation has been monitoring an increase in the number of forward days of stock cover, which is a key indicator for the group. Market sources have said Opec has so far removed more than half of the total cuts of 2 million bpd announced at a planned meeting in September and emergency talks in October, but that has failed to halt the price slide. “The price has put a gun to their head. That’s why they’re meeting,” said Mike Wittner of Societe Generale. In September, oil was still around $100, compared with above $60 during the October meeting and this week’s low of less than $55 a barrel — more than 60% below the alltime high of $147.27 struck in July. On Friday, oil prices fell more than $2 on persistent demand worries amid dismal retail sales data and a stronger dollar. US light crude for December delivery was down $1.84 or 3.2% at $56.40 a barrel by 21:30 pm IST, after trading from $56.16 to $59.96. London Brent crude for January — the new front month — lost $1.03 to $55.21 a barrel. The organisation has avoided naming a target price, but some in the group have said privately around $70 a barrel is a level that allows both producer and consumer needs to be met. Instead of focusing on Opec’s determination to reduce supplies, the market’s attention has fixed on the impact of the worst economic slowdown since World War-II on fuel demand and the resulting rise in fuel inventories. At the same time, Opec has watched the number days of forward cover rise. In its monthly market report on Thursday, the International Energy Agency, which represents consumer countries, said oil stocks in developed countries equated to 55 days of forward cover at the end of September and could rise to 56, according to preliminary October data. Figures from the US Energy Information Administration also put September and October forward cover at 56 days. “If winter demand does not erode inventory back down to 53-54 days, there will be excess supply in late January or February of 1.6 million bpd,” said Sadad al-Husseini, a former top executive at Saudi Arabian oil firm Saudi Aramco. The organisation will not release its monthly market assessment until Monday, but its data is widely expected to show a downward revision in demand growth. Following Opec’s last emergency talks in October, supply cuts were very swiftly begun. Many Opec countries use an allocation system, which sets supply levels weeks in advance, but they still have the option of using operational tolerance to add or subtract 10% of total volume. Calling a meeting two weeks earlier than one already set for December 17 in Algeria need not make a difference to how quickly supplies are tightened ahead of early next year when a seasonal drop in demand is expected. But frequent meetings can send a signal to the market that OPEC is determined to act as it did after the Asian economic crisis drove prices below $10 a barrel in 1998.

Rupee records biggest weekly drop

ALTHOUGH the rupee partly recovered part of huge losses it had registered on Wednesday, this still was the biggest weekly drop in a month on concerns that foreign funds would continue to exit their investments in the stock market. Liquidity remained stable as banks borrowed close to Rs 8,000 crore from RBI even as Rs 10,000 crore left the system after auction of long-dated government securities. The rupee ended at 49.01 against the dollar, off an intra-day low of 49.49, which was its weakest since October and down more than 3% in the week. One of the clear implications of deepening economic crisis for India is the continued pressure on liquidity and on the rupee. For the stock market, it could mean continued FII selling in the near term as financial institutions in developed economies continue to deleverage. However, he expects that continued pressure on emerging market liquidity is likely to force central banks to continue monetary easing and RBI should be no exception, he says. The rupee hit a record low of 50.29 against the dollar in late October. After gaining more than 12% against the dollar in 2007, it has fallen around 20% this year. The BSE sensex, India’s benchmark index, fell 1.6% on Friday to their lowest close in more than two weeks as the gloomy global economic outlook wilted early gains, with wary investors eyeing this weekend’s G20 meeting for some direction. Indian overnight call money rates fell on Friday as demand for funds was lower after the government infused Rs 10,000 into the system by repurchase of MSS bonds on Wednesday. They ended the day at 7.25%, trading during the day between 7% and 8%. Even the Rs 10,000-crore auction of long-dated government securities did not seem to have much impact on them. Dealers say although market stabilisation bonds buyback has helped, this will only last for a day or two as the market will again have outflows on Monday. Bonds rallied for a third day, pushing yields of benchmark 10-year bonds to a nine-month low, after a government report showed the inflation rate fall the most in at least 18 years to just under 9% in the week ended November 1. This was their biggest gain in almost three weeks on speculation that the accelerated slowdown in price gains will add pressure on the central bank to cut borrowing costs. The yield on the 8.24% note due on April 2018 fell 13 basis points to 7.48%.

Investors may see temporary gold shortage

INDIA is likely to face gold shortage in the near future with more people buying the yellow metal after global meltdown in Europe. With gold being looked as a lucrative investment option in European market, back home, the yellow precious metal will face the temporary shortage. Europe is unable to supply gold to India because European investors have started investing in gold.

Gold prices regained some of its recent losses in the Indian market on Wednesday despite a fall in international markets. Local markets gained mainly on the back of stockists’ buying who returned to market after a fall in equity prices. Some of the investors might have shifted their funds in gold from weak stock markets, boosting the prices of this metal. In Mumbai, pure and standard gold rose by Rs 80 and Rs 65 to Rs 11,885 and Rs 11,815 per 10 gm, respectively. In international markets, gold prices declined by more than 2% as the dollar firmed up against the euro, supported by lower crude prices. In London, spot gold fell to $717.00/719.00 an ounce.

Bulls bleed with Dismal close

The markets started the day on a weak note. They remained volatile in the subsequent hours of trade. The indices oscillated around the previous close till the afternoon session. While in the penultimate hour of trade, the markets tanked and broke the swing low of 2,860, which was a good support for the markets. Finally the market ended in the red with some range-bound movement in the final hour of trade. On the hourly chart, Nifty has broken the neckline of the head-and-shoulders pattern,so now the probable target for head-and-shoulders comes at 2,700. The hourly momentum is also in the favour of this head-and-shoulders pattern. Further, on the daily chart of the Sensex, we are having a good support of a previous bullish gap in the range of 9,361 and 9,297 (corresponding levels for Nifty is placed at 2,696). On the daily chart, though the momentum indicator KST is still in the buy mode, the gap between the indicator line and the signal line is shrinking. Bears dominated the market breadth with 891 declines and 312 advances.

On the hourly chart, the momentum indicator KST is riding its negative crossover and has breached the zero line. Our short-term bias is still down for the target of 2,745 with reversal placed at 2,975. However our midterm bias is still up for the target of 3,450 with reversal pegged at 2,650.

All the 13 sectors of the BSE ended in the red with the realty, metal and banking indices leading the fall. Among the 30 stocks of the Sensex only IT stocks were spared with Wipro, Tata Consultancy Services and Infosys Technologies ending in the green. On the other side Jaiprakash Associates, DLF and ICICI Bank led the packof losing stocks.

Gold trades lower

GOLD snapped its three-day long winning streak in the domestic markets on Tuesday as stockists took profits after a steep fall in international markets. In Mumbai, standard and pure gold traded Rs 35 and Rs 45 lower at Rs 11,750 and Rs 11,805 per 10 gm, respectively.

Some investors sold gold to raise funds for paying losses incurred on the equity markets. However, falling prices are yet to attract buyers as they expect more correction in prices. In Delhi, gold prices slipped to Rs 11,910, down Rs 160 over the previous close. While in Kolkata, the precious metal softened by Rs 80 to Rs 12,080, it closed at Rs 11,840 per 10 gm.

In international markets, gold lost more than 2% on the back of stronger dollar and lower crude prices. Even a steep fall in equity prices failed to lure buyers of safehaven metal. A recovery in oil and base metals prices on Monday was short-lived as fears over the outlook for the global economy resurfaced.

In London, spot gold fell to $732.20/734.40 an ounce at 9:30 pm IST, down from $745.75 in New York on Monday, when it rose as much as 3%.

Researchers Are Now Seen As A Cost Burden

WHEN the Sensex moved from a level of 3,000 in April 2003 to a dizzy 21,000 earlier this year, it was an unbelievable good time for anyone involved with the markets. One such benefactor was the analyst community. That was then. Today’s scenario with the Sensex being at around half the level down from that peak has left a lot of people in a quandary. The analyst community has been one such affected party. Five years ago, an equity analyst needed an MBA and a good reference. That was good enough for a job at a domestic broking house.

Typically, an analyst would spend a year before another broking house would grab him at an impressive hike — often twice as much. If things went to plan, in three years, the analyst would find himself inundated with offers from foreign broking outfits at mind-boggling salaries. Clearly, the journey to 21,000 fuelled a lot of ambitions and the mismatch between demand and supply was working overtime.

Meanwhile, broking outfits wanted research analysts to recommend stocks to their clients. This in turn would generate brokerage income for them. It was the large research team that owners of broking outfits would use as the selling point to prospective private equity investors. The effort seemed worthwhile for the analysts since the money was coming in.

Typically, an analyst with an experience of three years would command an annual salary of Rs 10 lakh and one with around twice that experience would draw as much as Rs 15-20 lakh. This was as far as domestic broking firms were concerned. If one was to head to a foreign firm, the salary would be twice as much as what was being made at the domestic broking firm. That story is hugely different today. “Many analysts came back to their own company after six months at double the salary,” says an industry observer a little wryly.

With cost cutting now the buzzword, broking outfits are looking closely at equity research which is a huge cost centre. Today, with some sectors such as real estate being under intense stress and even mid-caps going off the radar, research analysts in those segments will lose favour.

There is a school of thought which looks at analysts a little sceptically.

“Most of them form an opinion after meeting the company management. Very few of them bother to talk to clients or rivals of the company,” says a fund manager with a domestic fund house. That’s not the end of the story. “Not many analysts have seen multiple bull and bear cycles. With the demand-supply scene easing off now, it may be possible to obtain some quality analysts.

A broker looks at the weakness a little differently. “Not many were able to identify a stock in advance” . The idea comes from the superior in the office which was followed by some number crunching. Some of them made fancy presentations to fund managers to generate business for the fund house. There are many such instances.

A leading foreign broking house in April upgraded its target price for Suzlon from Rs 290 to Rs 380. Another foreign outfit in early March had a target of Rs 450 on the stock. The stock currently trades at Rs 65. There are similar stories for a lot of other mid-cap companies. Industry watchers, say analysts, often have no explanation in such cases. The downturn in the market has separated the wheat from the chaff. Broking houses that are serious about the business would try and retain its people and also get an opportunity to choose from a large pool.

Key supports broken by the Swift fall

Mirroring the negative global cues the Indian markets
opened on a pessimistic note. Consistent selling pressure
remained at the higher end, which pushed the markets
down without a single pause during the day. Further bears
also broke the wall of 20-day simple moving average
(DSMA), which was a dominant support for the markets.
On hourly chart too, the markets did not respect the
support of 20-hourly simple moving average (HSMA) and
40-hourly exponential moving average (HEMA), which is
not at all a good sign. On the daily candlestick chart, the
Sensex has formed a Black Marubozu candle (a bearish
candle with no shadows on either side), which is also
considered a weak sign. The only favourable sign for the
bulls is the ongoing positive cycle of the momentum
indicator KST. Today the market breadth was strongly
dominated by the bears with 961 declines and 259
advances.


On hourly chart, the momentum indicator KST has given
a negative crossover, which indicates some downside is
still on cards. We are revising down our short-term bias
for the target of 2,850 with reversal at 3,165. However
our mid-term bias is still up for the target of 3,450 with
reversal placed at 2,650.


The Sensex and Nifty ended with heavy losses of 696 and
209 points respectively. All the 13 sectors of the BSE ended
in the red with the BSE Realty, BSE Metal and BSE Power
leading the fall. Among the 30 stocks of the Sensex except
ITC all other stocks ended lower with Jaiprakash Associates
(down 13%), Sterlite Industries (down 12%) and Tata Steel
(down 11%) leading the bunch of losers.

Up and away

The Sensex started the day 100 points higher and managed
to hold the opening gap all through the day. In the opening
session itself the Sensex made a low of 10,095, which
was never touched again during the day as the market
rallied without any intra-day dip. On daily chart, Nifty is
forming an inverted head-and-shoulders pattern, whose
neckline is placed at 3,241 and an upside breakout of this
neckline will take Nifty to 3,650 in the near future. Further,
the close of Nifty above the 20-day simple moving average
is adding to this bullish scenario until Nifty holds the
support of the moving average. Another encouraging sign
for the bulls is the daily momentum KST that is still surging
and has also breached the zero line. Bulls totally dominated
the market breadth with 913 advances and 309 declines.

The hourly momentum indicator is also getting stronger
in upward direction, which is a good sign for bulls. Our
short-and mid-term biases are up for the target of 3,200
and 3,450. We are placing our short- and mid-term reversal
at 2,855 and 2,650.

Today the Sensex and Nifty both ended with phenomenal
gains of 571 and 175 points respectively. All the 13 sectoral
indices of the BSE ended in green with the BSE Metal, BSE
Power and BSE capital goods leading the rally. Among the
30 stocks of Sensex Sterlite Industries, Tata Steel and
Tata Power were the chief gainers. However ITC and
Maruti Suzuki India were chief losers.

Rising Population makes India a sugar importer

INDIA, the world’s largest consumer and second-largest producer of sugar, is turning into a net importer of the sweetener as growth in population and household incomes leads to higher consumption and forces the country to meet domestic demand from other nations.

Sugar consumption has increased by two million tonnes in the past two years, pushing up the annual domestic consumption to about 23 million tonnes from only 19 million tonnes in 2005-06. Consumption is growing by over 4% annually, but the government prefers to keep tightlipped about it and pegs the annual sugar consumption at only 21 million tonnes. This means domestic consumption will surpass the projected output (22 million tonnes at present) for the 2008-09 year, paving the way for sugar imports and sharpening domestic sugar prices for both industrial and retail consumers. Analysts have already projected that India will be a sugar importer from the 2009-10 sugar year.

In February this year, the core platform for private sector sugar units, the Indian Sugar Mills Association (ISMA), hiked its domestic consumption figures from 19 million tonnes to 21 million tonnes, against an overall production level of 28.4 million tonnes. It also projected domestic sugar consumption levels for 2007-08 sugar year to at least 22.5 million tonne, up from the official figure of 21 million tonnes.

Keeping domestic sugar consumption level low would mean that the carryover s t o c k s from last year would be lower by two million tonnes, at about 9 million tonnes. Compared to the lower government figures, industry estimates for 2007-08 sugar year (Indian Sugar, September 2008) are that internal consumption was a whopping 22.5 million tonnes (against production of 26.3 million tonnes and availability, including carryover stocks, of 35.5 million tonnes) compared to 21 million tonnes in 2006-07 and 18.5 million tonnes in 2005-06. Interestingly, the closing stocks for the year (as on September 30, 2008) are pegged at only 8.2 million tonnes compared to a higher 9.2 million tonnes in 2006-07 and 3.6 million tonnes in 2005-06.

Lower carryover stocks and the projected low sugarcane output projected for 2008-09 could spell high domestic sugar prices, something that the poll-bound UPA government would prefer not to face in the first half of next year when general elections are held. Sugar prices are among the most sensitive of election issues and the fact that the domestic prices have shot up from around Rs 15/kg in the retail market earlier this year to around Rs 20/kg now has already forced the Centre to pull out all stops to boost open market availability and drag down or at least hold prices.

Ironically, most recent studies show that sugar consumption has gone up significantly on account of industry (such as ice creams, soft drinks, pastries, chocolates and the pharma sector) and not on account of domestic consumption by the economically weaker sections for whom the government commands 10% of the production by mills for levy sugar.

This rally may be short lived

ON MONDAY, there was hardly any excitement in most dealing rooms, even as the Sensex kept rising through the day. For one, there were no frantic buy orders from clients, as is usually the case when the market is on a boil. Quite a few dealers were tracking cricket on the dealing room television sets while many others were worried if they would still be in their jobs at the end of this month. In short, India’s victory in the Nagpur test and the spectre of job cuts clearly overshadowed the 571-point surge in the Sensex.

There was another reason why Monday’s upswing in stock prices did not mean much. Combined traded turnover (equity + derivatives) on both exchanges was less than Rs 43,000 crore — the lowest in nearly 15 months. Traded turnover on NSE’s F&O segment was a paltry Rs 30,290 crore, indicating the reluctance among traders to take a near-term view on the market.

The Sensex closed at 10,536.16, up 571.87 or nearly 6% over the previous close, and the Nifty closed at 3148.25, up 175.25 points.

If one were to go purely by provisional figures, the rise in benchmark owed much to a slowdown in selling by foreign investors (-Rs 92.33 crore), and sustained buying by the local institutions (Rs 377.66 crore).

The positive trend in world markets also contributed to the upswing. Asian and European stocks rallied after China unveiled a $586-billion package to energise its economy and world leaders urged further reductions in interest rates. At the same time, a steady flow of bad news continued to trickle in. Leading US insurance major AIG reported a net loss for the fourth straight quarter while mortgage finance provider Fannie Mae reported a record quarterly loss of $29 billion after asset writedowns.

“The market is likely to form another intermediate top before breaking the recent lows,” said a BSE broker, adding that gains were unlikely to be sustained in the absence of strong foreign fund inflows, and any significant improvement in macro-economic fundamentals.

Advancing stocks trounced retreating ones in the ratio of 2:1 while 259 stocks hit the upper end of the intra-day circuit filter, and 160, the lower end.

Buy on major declines

THE most important thing is not to be impatient while trading or investing. The reason is that the market is still volatile and is likely to remain so till global markets stabilise. In the meantime, our market will offer a lot of opportunities to buy at dips and sell at highs. After the steep fall in stock prices in October, a look at the broad market reveals that the damage to individual stocks is severe and that has killed purchasing power drastically. In such type of scenario, I don’t think insiders may adopt rising bottom falling top approach to consolidate (symmetrical triangle). The ideal formation should be falling top falling bottom (falling wedge) or flat bottoms and falling tops (ascending triangle) to consolidate or prepare for the next up move. The average-traded volumes should come down to extreme levels that will indicate diminishing interest of selling force in the market.

For investors, our advice is to have guts to buy on major declines and sell back the same at major resistance levels. For traders, our advice is same; follow major levels to trade without any specific view of bullish or bearish.

The level of 2860/9700 may act as a concrete support for the market and breach of the same may invite further sell-off to the levels 2650/8900, or may be even up to 2580/8720. However, a close below 2580/8720 may empower bears and in that case retesting of previous lows is not ruled out. On the higher side, sustenance of the market above 3050/10450 may lift the sentiment and in that case the market may even surge to 3250/10900. However, weekly close above 3170/10800 may lift the market to even 3400/11600.

Spices move up

SPICES, except pepper, witnessed good upside on the commodity exchanges through out this week. Jeera, turmeric and chilli moved up due to some demand in the spot market and late sowing in the case of jeera that led to short covering.

Jeera November contract on NCDEX moved up by 4.55% since last week closing at Rs 11,465 per quintal due to delayed sowing reports though demand was weak. Approximately 75% of jeera sowing is normally completed before diwali in Gujarat but due to low moisture content of the soil it has been delayed. According to Alimuhammad Lakdawala of Anand Rathi Commodities going forward there can be some upside but the gains will be capped due to slack demand.

Turmeric also moved by over 4% since last week and the December contract on NCDEX closed at Rs 3,665 per quintal after making a high of Rs 3,689. This was due to short covering as there was some buying in the spot markets where prices moved up by 3% closing at Rs 3,705. Some orders were also registered from the overseas markets. There has been reports of buying by stockists from the North India. According to a report by Angel Commodities, stocks with the stockists in the local market are low due to low production this year. This will support the prices once the demand from overseas market is placed in good quantity. “If prices trade above Rs 3,660 per quintal they may touch Rs 3,800 levels in the coming weeks,” says the report.

In chilli the December contract closed up 2.47% at Rs 5,343 per quintal after making a high of Rs 5,401. The futures market is at a discount to the spot market and the prices were up due to short covering and low stocks at the exchange warehouses. In spot market chilli closed marginally up at Rs 5,532 per quintal at the Guntur market. Faiyaz Hudani from Kotak Commodities said that volumes in chilli are very low and prices will be range bound having a resistance at levels of Rs 5,350-Rs 5,400 per quintal.

Pepper prices traded weak closing down 2.28% at Rs 11,336 per quintal since previous week due to sell-off, short covering and limited trade in the spot market. Buyers have sidelined themselves looking at the volatility in the futures market.

Bulls out of woods with Firm close

Indian markets started the day on a negative note taking
lead from global markets. The benchmark indices
oscillated within a small range until noon. After noon, the
markets blasted out and closed in the green with handsome
gains. On daily chart, Nifty has taken support at 38.2%
retracement level (of the move from 2,252-3,240).
Further this support was backed by positive daily and
weekly closes, which is a good sign for the markets. The
daily momentum KST also points towards a good northward
rally in the coming sessions. So the gist of the story is
that bears should become cautious. The overall market
breadth also turned from red to green as the day
progressed.


On hourly chart, the momentum indicator KST has given
a positive crossover. Also Nifty has given close above both
20 and 40 hourly moving averages. Our short-term bias
is revised up for the target of 3,200 with reversal pegged
at 2,855. However our mid-term bias is still up for the
target of 3,450 with reversal nailed at 2,650.


All the 13 sectors of Sensex ended in the green with power,
oil & gas and metal sectors leading the rally. Among the
30 stocks of Sensex, leaving Mahindra & Mahindra all other
stocks ended in the green with Reliance Infrastructure,
Hindalco Industries and Reliance Communications
emerging as the chief gainers.

Sensex fails to hold on to 10k

THE season of bad news seems to be far from over, even as governments and central banks are trying everything possible to limit the damage to their respective economies.

In the US, the unemployment rate for October rose 40 basis points over the previous month to a 14-year high of 6.5%. In the past couple of months, 5.2 lakh works have been laid off, the biggest two-month job cuts since 2001. A foreign news agency reported that automobile majors GM, Ford Motor and Chrysler have sought a $50-billion bailout package to help them ride the worse slump in the auto market in nearly 25 years. The US equity market appears to have discounted these developments, with the Dow Jones Industrial Average quoting slightly higher in early trade. Key markets in Asia — with the exception of Japan — ended higher, while European markets ended mixed. Amid the gloom, there were some indications that the liquidity infusions by various central banks is gradually taking effect. The 3-month Libor — the cost of borrowing dollars in London — fell to a 4-year low, in response to reduction in benchmark lending rates, globally.

In India, equity benchmarks rallied over 2% on Friday, but on thin volumes, reflecting the cautious mood among investors. The 30-share Sensex ended the day at 9,964.29, up 230.07 points, or 2.4%, over the previous close, after having touched a high of 10,065.37 intra-day. The 50-share Nifty ended the day at 2,973 points, up 80.35 points, or 2.8%, over the previous close.

Combined traded turnover on both exchanges was around Rs 48,000 crore. This is the third time this week that it has been less than Rs 50,000 crore. The upswing on low volumes indicates that stock prices rose in the absence of any major selling pressure. Institutional activity was lacklustre; FIIs were net sellers of Rs 19 crore worth of shares, while local institutions net-sold Rs 147 crore worth of shares.

Sensex fails to hold on to 10k

THE season of bad news seems to be far from over, even as governments and central banks are trying everything possible to limit the damage to their respective economies.



In the US, the unemployment rate for October rose 40 basis points over the previous month to a 14-year high of 6.5%. In the past couple of months, 5.2 lakh works have been laid off, the biggest two-month job cuts since 2001. A foreign news agency reported that automobile majors GM, Ford Motor and Chrysler have sought a $50-billion bailout package to help them ride the worse slump in the auto market in nearly 25 years. The US equity market appears to have discounted these developments, with the Dow Jones Industrial Average quoting slightly higher in early trade. Key markets in Asia — with the exception of Japan — ended higher, while European markets ended mixed. Amid the gloom, there were some indications that the liquidity infusions by various central banks is gradually taking effect. The 3-month Libor — the cost of borrowing dollars in London — fell to a 4-year low, in response to reduction in benchmark lending rates, globally.



In India, equity benchmarks rallied over 2% on Friday, but on thin volumes, reflecting the cautious mood among investors. The 30-share Sensex ended the day at 9,964.29, up 230.07 points, or 2.4%, over the previous close, after having touched a high of 10,065.37 intra-day. The 50-share Nifty ended the day at 2,973 points, up 80.35 points, or 2.8%, over the previous close.



Combined traded turnover on both exchanges was around Rs 48,000 crore. This is the third time this week that it has been less than Rs 50,000 crore. The upswing on low volumes indicates that stock prices rose in the absence of any major selling pressure. Institutional activity was lacklustre; FIIs were net sellers of Rs 19 crore worth of shares, while local institutions net-sold Rs 147 crore worth of shares.

Gold price falls

GOLD surrendered its overnight gains in the domestic market on Thursday in the absence of any trigger. However, lower prices failed to propel demand for gold jewellery, as buyers were anticipating further fall in prices. A section of the market players said gold was overbought for the past few days and hence a correction was in the offing. They said further price adjustments were the pipeline. Most investors who had increased their positions in the past few days have sold a part of their holdings despite a steep fall in equity prices , they added. However, a weak rupee restricted the downside of the yellow metal, a bullion merchant said in Mumbai.
In Mumbai, pure and standard gold fell by Rs 105 and Rs 100 to close at Rs 11,705 and Rs 11,645 per 10 gm, respectively. While in Delhi the yellow metal became cheaper by Rs 150 to Rs 11,850, the metal declined by Rs 100 to Rs 12,105 per 10 gm in Kolkata. Chennai markets also saw a loss of Rs 75 as the metal settled at Rs 11,775 per 10 gm.
Meanwhile, gold prices gained more than 2% to $748.10 an ounce in European markets on Wednesday after the Bank of England slashed rates by a consensusbusting 150 basis points and the Swiss National Bank cut its rates by half a point. In London, spot gold after touching intraday high of $748 stood at $746.00/748.50, up from $739.45 in the US market on Wednesday.

Sensex falls again

EVEN as central banks continued to unveil rate cuts to boost liquidity into the system, equity investors across Asia and Europe dumped stocks on concerns over corporate earnings. Toyota Motor, the world’s secondlargest automobile firm, warned of the biggest drop in profit in at least 18 years, due to a combination of weak demand and strong yen. Indian equity benchmarks fell 3-4%, but fared better than Asian peers like Hong Kong, Japan, South Korea and Taiwan, which were down 5-7%. Key European markets fell despite rate cuts announced by the Bank of England and the European Central Bank. The Bank of England on Thursday unexpectedly lowered its key rate by 1.5 percentage points to 3%, the lowest rate since 1955. ECB slashed its key rate by 50 basis points to 3.25% — the second cut in less than a month — while rate cuts were announced by the Czech and Swiss central banks too. ECB President Jean-Claude Trichet did not rule out a further reduction in interest rates, saying the global financial crisis could lead to an extended economic slump. The 30-share Sensex ended the day at 9,734.22, down 385.79 points over the previous close. The 50-share Nifty closed at 2892.65, down 92.30 points. Traded turnover was slightly better, compared with the early part of the week. Close to Rs 58,000 crore worth of shares and equity derivatives were traded on both exchanges combined. However, foreign institutional investors continued to press sales. As per provisional data, FIIs net sold Rs 511 crore worth of shares on Thursday. Domestic institutions seem to have resumed their buying activity, mopping up shares worth over Rs 350 crore. “The consensus forward P/E slipped into the single digit territory — a level below, which it has not spent much time ever in the past. Most unbelievably, trailing price-tobook has collapsed to within 10% of the lowest levels seen since at least 1995,” said a strategy note by broking house Credit Suisse. “The market has come to a point where long-term, value investors that are not interested in timing the bottom should begin to invest heavily,” the note added. Metal shares took a pounding, and was the worst-performing sector, with the BSE Metal index shedding over 8%. Realty shares were the best performing sector, with the BSE Realty Index ending around 1% higher than the previous close.

Choppy session Inflated/deflated

The domestic indices opened on a weak note amidst
negative global cues and traded below the previous close
for larger part of the trading session. While in the
penultimate hour of trade, they managed to swing towards
the previous close led by intensified buying activity at
lower levels. However, this momentum was short-lived
as in the final trading hour the markets gave up all the
gains to close deep into the red. On hourly chart, Nifty is
trading within a falling channel and is expected to touch
the lower line of the channel placed at 2,775. On upper
end, Nifty is having resistances of 20 HSMA and 40 HEMA,
which are placed at 2,954 and 3,019 respectively. The
daily momentum indicator is trading sideways. The overall
market breadth was negative with the losers outnumbering
the gainers.


On hourly chart, the momentum indicator KST is still riding
its negative crossover and has also breached the zero
line. Our short-term bias is still down for the target of
2,750 with reversal packed at 3,250. However our midterm
bias is still up for the target of 3,450 with reversal
nailed at 2,650.


The Sensex and Nifty both ended with a loss of 385 and
102 points respectively. Among the 13 sectors of the
Sensex, realty and health care were the only sectors that
ended in the green, while all other sectors ended in the
red with metal and oil & gas sectors leading the party.
Among the 30 stocks of the Sensex Jaiprakash Associates
and Hindustan Unilever led the pack of gainers while Tata
Steel and Tata Motors led the bunch of losers.

Bears Play Show Stoppers

After positive opening, the markets were unable to hold
on to their opening gains and slid into the negative
territory in the initial hour of trade. The southward journey
continued till the final hour of trade, which pushed the
indices deep in the red. On daily candlestick chart, the
Sensex has formed a bearish engulfing pattern, which
shows that bears will have an upper hand over the bulls,
with today’s high as a dominant hurdle. Further,
yesterday’s close of the index above 20 DSMA has turned
out to be a whipsaw as today Index has again slipped
below that average, which further adds to the bearish
sentiments. Also on hourly chart, Nifty has breached the
neckline of head–and–shoulders pattern and is now
approaching towards its conservative and aggressive
targets that are placed at 2,925 and 2,875 respectively.
The daily momentum indicator KST has turned flat, yet it
has not given a negative crossover. Market breadth, which
was initially in the favour of the bulls slipped into the
favour of the bears as the day progressed.


On hourly chart, the momentum indicator KST is continuing
to ride its negative crossover. We have revised our shortterm
bias down for the target of 2,750 with the reversal
pegged at 3,250. However our mid-term bias is still up
for the target of 3,450 with the reversal nailed at 2,650.


The Sensex and Nifty both ended with a loss of 511 and
147 points respectively. All the 13 sectors of the BSE except
BSE HC ended in the red. Among the 30 stocks of Sensex
Wipro was the only stock that ended in green with a gain
of 2%, whereas Reliance Industries (-14%), Tata Steel
(-11%) and Reliance Communications (-10%) were the key
losers.

Sensex loses 511 points

MAIN street may be ecstatic at Barack Obama’s victory in the US Presidential race, but Wall Street and European markets don’t see any reason to cheer. The Dow Jones Industrial Average and the Nasdaq were down nearly 2% in early trade while key European markets fell 2-3%, as investors appear more worried about a global slowdown. Back home, a 13% decline in Reliance Industries pushed down equity benchmarks by over 5%, causing India to underperform its Asian peers.
The BSE 30-share Sensex snapped a five-day winning streak to end with a 511-point, or 4.8%, loss at 10,120. The index had rallied more than 2,000 points in the past five consecutive sessions. The NSE Nifty closed 147 points, or 4.7%, down at 2,995 on Wednesday.
The weak sentiment in India was attributed to many factors. There are fears that outsourcing from the US to India may be affected after Obama is elected as the US president. The newly-elected president is apparently against outsourcing, going by his statements in his election speeches. However, IT stocks were among the better-performing sectors. Oil and gas stocks bore the brunt of Wednesday’s sell-off as the BSE Oil & Gas index tanked 637 points, or 9.4%, to 6,112.

Nifty Resistance @ 3100

The market today has opened flat with a bit of follow-up
selling. The Nifty is forming an inverted head-and-shoulder
pattern, which has a neckline at 3100. The pattern is now
on its way to forming its right shoulder, which has support
around 2850. On the daily charts, the index has strong
resistance at 20-DMA and 40-DMA, ie 3140 and 3470
respectively. The market breadth is positive with 710
advances and 415 declines. The daily momentum indicator
has given a positive crossover. On the daily charts, support
at 2850 and strong resistance at 3100 are indicated.


On the hourly charts, the momentum indicator has given
a negative crossover. We expect the momentum to be
negative for the day. Support at 2970 and a very strong
resistance at 3100 are indicated on the hourly charts.


Of the 30 stocks in the Sensex, State Bank (up 3.60%) and
Aban Offshore (up 5%) are the top gainers. 3i Infotech is
likely to test Rs53 on the upside and has strong support at
Rs43. Among the sectors, the banking sector has gained
momentum and is expected to move upward.

Sensex above 10k

THE slew of policy measures announced by RBI on Saturday had a positive impact on the market. Combined with positives cues from Asian markets, equity benchmarks extended their winning streak on Monday, closing above psychological levels, but most market participants are viewing it as nothing more than a relief rally. Provisional data showed foreign institutional investors as being net buyers for the second day in a row. However, given the gloomy mood — both in the domestic economy as well as globally — it remains to be seen if these inflows can sustain long enough for the indices to climb back to respectable levels. It is too early to say if mutual fund inflows are tapering off, though there are signs that local investors’ patience is wearing thin. FIIs net bought Rs 363 crore worth of shares, while domestic institutions were net sellers of Rs 97 crore of shares.
Also, Monday’s gains have to be viewed in the context of combined traded turnover, which was around Rs 48,000 crore. Traded turnover in the derivatives segment was less than Rs 35,000 crore, an unusually low figure for the early part of a settlement cycle. The 30-share Sensex closed above 10,000 for the first time in nearly two weeks, rising 549.62 or nearly 6% to close at 10,337.68. The 50-share Nifty closed above 3000, gaining 158.25 points to end the day at 3043.85.
In the currency market, RBI’s move of easing rates last week made an impact, as the rupee fell below 49 to the dollar and call rates cooled down to around 7%. RBI cut the key repo rate by 50 basis points and reduced CRR and SLR by 100 basis points each on Saturday. Its primary aim was to improve liquidity though the impact on the equity market has been positive, at least in the short run.
India was the best performer among key Asian markets. Hong Kong, South Korea, Taiwan and Singapore were up between 1% and 5% while Japan was an exception to the trend, shedding 5%. European markets were mixed, with the European Commission stating that the region’s economy may have already entered a recession this year, and predicting that it would stagnate in 2009. And the steep plunge in commodity prices has led many analysts to forecast that the US may be headed for its longest recession in over two and a half decades.
There were positive developments though, as the three-month London inter bank offered rate (Libor) — the cost of borrowing in dollars in London — fell on hopes of further rate cuts by the European Central Bank. The three-month Libor rate fell to a one and a half month low of 2.86%.
Back home, realty stocks were the star performers, with the BSE Realty index shooting up over 8% to close at 2142. Brokers continued to remain sceptical on the sector though as companies are facing a severe cash crunch, prompting many of them to go slow on new projects and reduce prices in case of already developed projects.
Other strong performers included capital goods and banking sectors. Infrastructure firms L&T and Jaiprakash Associates were up 10-13% while SBI surged 12%.

Today Support @ 2846

Market today has opened gaped up. Nifty is now trading
above the 40 HMA i.e. 2846 levels, which is a strong
support. On the daily charts, the index has strong resistance
at 20 DMA and 40 DMA i.e. 3150 and 3990 respectively. We
expect momentum to be positive for the day. Market
breadth is positive with 1053 advances and 143 declines.
Daily momentum indicator has given a positive crossover.
On the daily charts, support at 2850 and strong resistance
at 3150.
On hourly charts, Nifty has Inverted Head & Shoulder, which
had it’s neckline at 2920 and has also broken out of the
pattern for the target of 3600, which is a strong sign going
forward. Support at 2900 and a very strong resistance at
3050 on hourly charts.
Of the 30 stocks of the Sensex, Reliance (up 4%) and
Punj Lloyd (up 9%) are the top gainers. TCS is likely to test
Rs520 on the downside and has strong resistance at Rs570.
Among the sectors, Metal sector have gained momentum,
and expected to move downward

Positive weekly close

The market on friday opened with a gap up--the Sensex was
up 300 points and Nifty was 100 points higher at opening
bell. The market kept consolidating all through the day
and at the end of the trading session, the Sensex and
Nifty closed at their day’s high, posting gains of 743 points
and 188 points respectively. The momentum indicator on
the daily charts has given a positive crossover but trading
below the zero line. The 20- and 40-day moving averages
are at 10,500 and 11,600 respectively on the Sensex,
which are strong resistances on the upside. Good support
levels exist around 9,400 and 9,000. The market breadth
was positive. NSE witnessed 854 advances and 364
declines whereas BSE saw 1,594 advances and 926
declines. Our short-term bias is up with reversal at 8,594
and target at 10,500.
On the hourly chart, an inverted head & shoulders pattern
has been formed with a neckline at 2,920 and target at
3,600. The momentum indicator, KST, has a positive
crossover and trading above the zero line.
The Sensex and Nifty ended the day with gains of 743 and
188 points respectively. Of the 30 stocks of the Sensex,
Reliance Industries (up 14%) and Tata Steel (up 14%) were
the top gainers, while Suzlon Energy was down by 3.4%.
Power sector has gained upside momentum.

Expect the unexpected

THE benchmark Nifty faces a short-term resistance at 3030. The next major hurdle for the index is at 3495, which is the 30-day simple moving average. If the current rally is only a bear market correction, then the Nifty will not move above the 3030-level. As long as the Nifty Volatility Index remains on the higher side, investors should expect the unexpected. If the index slides, it has a support at 2675 and then at 2525. On Friday, the Nifty closed at 2885.60. The index had hit a panic bottom at 2252.75 on October 2008, witnessing one of the sharpest-ever falls from 3950 early October. The Nifty volatility Index has moved above 69%, which is still on the higher side. But it may be noted that after the sharp fall, Indian markets were in the oversold territory. The daily, weekly and monthly relative strength index (RSI), which attempts to determine overbought and oversold conditions of a security, was in the oversold region, suggesting the recovery that happened in the form of short-covering ahead of the October futures and options expiry was expected. (If the RSI indicator is below the 20-mark, it indicates oversold situation and above 80 shows overbought situation). The broad-based fall resulted in majority of stocks testing new 52-week lows. If a stock falls below its 52-week low, it is said to be bearish. Buying can only be considered in such a stock, only if it appears heavily oversold on monthly charts. Otherwise, it needs to get firm support and consolidation, which can be identified with higher volumes. But caution is important, as even if the stock is consolidating, the indices may not be. Heavy weight stocks such as Reliance Industries, Infosys, ICICI Bank, Bharti Airtel and Reliance Infrastructure were in the oversold territories. The five-month RSI for these stocks, which were in the oversold region, has given a ‘buy’ signal. Reliance Industries faces resistance at Rs 1,432 and a break above this can drive up the stock sharply. Infosys, which is trading above its 20-day moving average of Rs 1,307 on higher volumes, also appears strong. ICICI Bank has resistance at Rs 415, and if the stock closes above this level for at least two days, it will help the bulls to lend support. On the Nifty, many stocks that are available below their book value has given good opportunities to investors with medium-term perspective including Hindalco, Tata Steel, Cairn India, Tata Motors and BPCL. In the US, the Dow’s moving average combination of 30- and 5-day, which has given a ‘sell’ signal on first week of September 2008, has not yet given a ‘buy’ signal. But the interesting point to be noted is that if Dow breaks the 9640-level and closes consecutively for more than three days, then it will give a strong reversal, which can lift the Dow towards 10860. The short-term outlook for the Nasdaq is better than that of the Dow, because the extreme short-term combinations of simple moving averages of 3-, 9- and 18-day combinations have given a ‘buy’ signal. The 3-day simple moving average penetrates the higher moving averages of 9- and 18-day from the lower side shows further possible uptrend for the Nasdaq. It has tested 1500 levels thrice on October, indicating a possible reversal. If that happens, Indian ADR (American depository receipts) stocks, which are listed on the Nasdaq, are going to benefit, especially Infosys, TCS, Satyam computers, Wipro, ICICI Bank, HDFC Bank. Among Indian ADRs, Infosys, HDFC Bank and ICICI bank are showing positive divergence and further accelerated movements are expected.

RBI move may extend rally

THE sooner-than-expected measures by the Reserve Bank of India (RBI) to ease the money-supply crunch, including an interest rate cut, may enable the bulls to stretch Friday’s rally into early next week. But as the week progresses, the domestic investors will look for directional cues from US and European markets.
The US market rose nearly 2% on Friday, as investors cheered JP Morgan Chase’s measures to stem the crash in America’s housing market. The Fed slashed the benchmark interest rates last week and indicated additional cuts to revive the economy, prompting other central banks to trim the rates in a co-ordinated manner. Equities across the world rallied strongly as a result. Investors in Indian equities took a special note of the decline in inflation, triggering hopes of interest rate cuts, and the Standard & Poor’s (S&P) statement that India’s investment-grade credit ratings is safe. Investors expected RBI to cut rates next week, with the overnight interbank lending or call rates rising to a 19-month high of roughly 20%. “We expect more upsides in stocks early next week, as the much-needed interest rate cut was earlier than anticipated,” said Mirae Asset Global Investments senior fund manager Gopal Agrawal. “For any rally to sustain, it is important that there are no fresh issues in global markets and economies,” he added. The liquidity-injecting measures initiated by several countries last week, following the free fall in equities to four-year lows, has improved investor sentiment world-wide. “In the past few days, we’ve received more requests for stock screens than usual. This may mark a shift in sentiment, from the relentless selling of recent weeks to finding buy ideas,” said UBS Securities in a report on Asian equities. Analysts are, however, unsure whether the bear market is nearing an end. Global investors remain averse to risky assets. Moreover, the credit crunch threatens to jeopardize the growth plans of companies in developing economies such as India. “We continue to believe that investors are underestimating the impact of the credit crunch on countries having current account deficits,” Nomura International Asia and emerging markets analyst Sean Darby said. Driven by high oil prices in recent years, India has a large current account deficit and this shows the extent to which a country’s consumption exceeds its production.

Market Up for third Consecutive day

The Sensex continued to move up for the third consecutive day with the index registering smart gains on buying in heavyweight and sectoral stocks.
The 30-stock benchmark index of the BSE was above 9,300 points at the starting bell and touched the high at 9,870. However, it pared the gains on selling in heavyweights and shed sharply to touch the low of 9,362 towards the close. The Sensex came close to testing 9,400 towards the day’s close, but ended the session with a gain of 744 points at 9,788. Nifty gained 189 points to close at 2,886.
The breadth of the market was marginally positive. Of the 2,575 stocks traded on the BSE, 1,577 stocks advanced, whereas 916 stocks declined. Eighty two stocks ended unchanged. Of the 13 sectoral indices, BSE Metal surged 10.20% to 5,367 followed by BSE Oil & Gas (up 9.11% to 6,195) and BSE Bankex (up 7.21% to 5,011). The remaining indices also ended higher.
Among the gainers, Mahindra & Mahindra (M&M) advanced 23.09% to Rs372.35, HDFC surged 17.48% to Rs1,764, JP Associates added 16.55% to Rs71.85, ICICI Bank advanced 15.50% to Rs399.35, Sterlite Industries gained 14.48% to Rs282.20, Reliance Industries jumped 13.81% to Rs1,370.75 and Reliance Communications was up 13.76% to Rs220.70. However, Ranbaxy Laboratories dropped 1.97% to Rs169.45 and Tata Consultancy Services declined 0.93% to Rs537.45.
Over 1.68 crore Suzlon Energy shares changed hands on the BSE followed by Hindalco Industries (1.34 crore shares), Reliance Petroleum (1.00 crore shares), Unitech (84.98 lakh shares) and Core Projects & Technologies (81 lakh shares).

Election jobs to set tone for US stocks

WALL Street hopes to turn a new page as it heads into November, but next week is littered with hurdles ranging from the US presidential election to a likely gloomy jobs report. Traders were more than happy to see the back of October, one of the worst months in history for the broader market, and took heart from the fact that it ended with one of the best weeks on record.
This week’s strength came as the host of efforts by central banks and governments to ease credit strains began to bear fruit, and volatility abated slightly. Bargain hunting and funds buying stocks to rebalance their portfolios also helped boost stocks.
For the first part of next week, Wall Street, like the rest of America, will turn its attention to Tuesday’s presidential election. Democrat Barack Obama’s lead over Republican rival John McCain held steady at seven points as the race for the White House entered its final four days. Investors will likely assess the possibility of quick fiscal stimulus after the election and the risk of protectionist measures or more regulation.
Thomson Reuters data shows that on average the 60 days preceding a new presidential term yield positive returns, suggesting that the lack of uncertainty after elections usually gives the market a boost.
“Once we know what the balance of power will look like, investors can factor that into the equation. The market may not like who wins, but it will like knowing,” said Christopher Zook, chairman and chief investment officer of CAZ Investments in Houston.
But a raft of economic data will be vying for investors’ attention, as will earnings reports in the last heavy week of the autumn results season.
In the week ahead, the main event on the economic calendar is the October US employment report. That data, due on Friday, is expected to show that US nonfarm payrolls shed 2,00,000 jobs in October, according to a Reuters poll, while the unemployment rate is forecast to rise 6.3%.
Other key economic reports include the Institute for Supply Manage-ment (ISM) reports on manufacturing on Monday and non-manufacturing, or service sector, activity on Wednesday. Both are expected to produce readings showing that the economy contracted in October.
Among the major companies set to report earnings next week are Anadarko Petroleum, MasterCard, Cisco Systems and Sprint Nextel. With 59% of S&P 500 companies having reported earnings in the third quarter, on average earnings for companies in the index are expected to fall 23.8% for the quarter.
Meanwhile, the Federal Reserve’s efforts to shore up short-term lending for companies and banks continued to build momentum in the critical commercial paper market with a program the US central bank launched this week. October was a nightmare for US stock investors, with the Dow Jones industrial average ending the month down 14.06%, its worst monthly percent age drop since August 1998. The Standard & Poor’s 500 Index slid 16.83% this month for its worst onemonth percent age slide since October 1987. The Nasdaq lost 17.73% in October, its worst one-month percent age loss since February 2001.
For the week, though, Wall Street wrapped up a rotten month with a Halloween treat. Stocks ended Friday’s session higher, following Thursday’s advance a day after the Fed’s half-percent age-point rate cut. This performance gave the US stock market its first back-to-back gains in over a month.
The Dow finished the week up 11.3%, its best weekly percent age gain since October 1974, while the S&P 500 climbed 10.5%, its best weekly percent age gain since at least January 1980. The Nasdaq rose 10.9%, its best weekly percent age gain since April 2001.