FOREX OUTLOOK FOR THE DAY

EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4024; (P) 1.4160; (R1) 1.4239.

EUR/USD dives through mentioned 38.2% retracement of 1.2329 to 1.5143 at 1.4068 today and reaches as low as 1.4028 so far. At this point, intraday bias remains on the downside as long as 1.4137 minor resistance holds. Further decline should be seen to next medium cluster support level at 1.3737. On the upside, above 1.4137 will turn intraday bias neutral and bring recovery first. But upside should be limited below 1.4334 support turned resistance and bring fall resumption.

In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall from 1.6039 should be resuming for a new low below 1.2329. On the upside, above 1.5143 resistance is needed to invalidate this view. Otherwise, outlook will now remain bearish.

USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 90.87; (P) 91.16; (R1) 91.54.

No change in USD/JPY's outlook. Recovery from 90.30 might continue but after all, fall from 93.74 is still expected to resume as long as 92.03 resistance holds. Below 90.78 will flip intraday bias back to the downside and further break of 90.30 will bring fall resumption to 87.36 support next. Break there will confirm the bearish case that whole rebound from 84.81 has completed with three waves up to 93.74 already. This will also argue that medium term down trend is resuming for a new low below 84.81. On the upside, above 0.9203 will argue that fall from 93.74 is completed and will bring stronger recovery. But risk will remain on the downside as long as 93.74 resistance holds and another fall is still in favor after the consolidations.

In the bigger picture, USD/JPY is still trading below medium term trend line resistance at 94.71 and 55 weeks EMA at 94.07. Whole down trend from 124.13 is likely still in progress and a break of 84.81 will target 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation

GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.6232; (P) 1.6301; (R1) 1.6359.

GBP/USD's decisive break of 1.6209 support affirms that case that corrective rise from 1.5829 has completed with three waves up to 1.6456 already. Intraday bias is flipped back to the downside and further decline should be seen to retest 1.5829 support first. Break there will confirm that whole fall from 1.6875 is resuming for 1.5706 key cluster support. on the upside, above 1.6311 minor resistance will turn intraday bias neutral and mixes up the short term outlook.

In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is treated as a correction to down trend from 2.1161, has completed at 1.7043. Firm break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) will confirm this case and indicate that whole down trend from 2.1161 is likely resuming for a new low below 1.3503.

However, note that sustain break of 61.8% retracement of 1.6875 to 1.5829 at 1.6475 will in turn indicate that whole fall from 1.6875 has completed and recent price actions from 1.7043 are merely consolidations to the larger rise from 1.3503 only. That is, whole medium term rise from 1.3503 might not be finished yet and another rise could still be seen to 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion

USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0351; (P) 1.0406; (R1) 1.0496

At this point, intraday bias in USD/CHF remains on the upside for 1.0506 resistance. Break there will confirm that whole rise from 0.9916 has resumed and should target medium term support turned resistance at 1.0590. On the downside, below 1.0418 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained above 1.0291 resistance turned support and bring rally resumption.

In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already, on bullish convergence condition in daily MACD. Also, the three wave consolidation from 1.2296 should be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1005). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9916 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.

USD/CAD Daily Outlook
Daily Pivots: (S1) 1.0347; (P) 1.0417; (R1) 1.0534.

As discussed before, USD/CAD's fall from 1.0744 has completed at 1.0223 already, ahead of 1.0205 key support as expected. Intraday bias remains on the upside for the moment and further rise should be seen to 1.0744 resistance first. Break there will also confirm our bullish view that whole consolidation from 1.0851 has finished with three waves down to 1.0223 too. In such case, rise from 1.0205 should be resuming for 1.0851 and beyond. On the downside, below 1.0425 minor support will turn intraday bias neutral and bring retreat. But downside should be contained above 1.0313 resistance turn support and bring rally resumption.

In the bigger picture, we're still favoring the case that a medium term bottom is already in place at 1.0205 with bullish convergence conditions in daily MACD. As noted before, fall from 1.3063 is viewed as a correction to long term rise from 0.9056. Such correction might have already completed with three waves down to 1.0205 already (1.0784, 1.1732, 1.0205). Break of 1.0851 resistance will confirm this case and target 61.8% retracement of 1.3063 to 1.0205 at 1.1971 at least. On the downside, however, break of 1.0205 will invalidate this view and bring down trend resumption to parity instead.

AUD/USD Daily Outlook
Daily Pivots: (S1) 0.9033; (P) 0.9138; (R1) 0.9203.

AUD/USD dropped to as low as 0.9072 overnight but recovers after meeting 38.2% retracement of 0.8734 to 0.9327 at 0.9100. At this point, though, intraday bias remains on the downside as long as 0.9195 minor resistance holds and another fall could still be seen. Nevertheless, downside should be contained by 61.8% retracement at 0.8961. On the upside, above 0.9195 minor resistance will flip intraday bias back to the upside for retesting 0.9327 resistance first.

In the bigger picture, the corrective three wave structure of fall from 0.9404 to 0.8734 suggests that whole medium term rise from 0.6008 is still in progress. Break of 0.9404 will confirm medium term rise resumption and should target 2008 high of 0.9849. On the downside, though, break of 0.8734 support will revive the case that whole medium term rise from 0.6008 has completed and will turn outlook bearish for deeper correction towards 0.7702/0.8626 support zone.

EUR/JPY Daily Outlook
Daily Pivots: (S1) 127.94; (P) 129.12; (R1) 129.86.

Intraday bias in EUR/JPY remains on the downside with 129.634 minor resistance intact and further fall should be seen to 126.88/127.50 support zone. As discussed before, recent development suggests that price actions from 126.88 are merely consolidation to fall from 138.47 and should have completed at 134.36. Break of 126.88/127.50 will confirm the whole decline from 138.47 has resumed and should target 124.35 support next. On the upside, above 129.63 minor resistance will turn intraday bias neutral and bring consolidations. But recovery is expected to be limited by 131.50 resistance and bring fall resumption.

In the bigger picture, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. On the downside, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already and down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend. On the upside, however, break of 134.54 resistance will revive that case that recent price actions are merely consolidations to medium term rise from 112.10 already and another high above 139.21 should be seen before EUR/JPY tops.

EUR/GBP Daily Outlook
Daily Pivots: (S1) 0.8627; (P) 0.8680; (R1) 0.8710.

EUR/GBP's strong break of 0.8704 support suggests that whole decline from 0.9410 is still in progress and at this point, intraday bias remains on the downside for next target of 100% projection of 0.9410 to 0.8833 from 0.9153 at 0.8576 next. On the upside, above 0.8733 minor resistance will turn intraday bias neutral and bring recovery. But risk will remain on the downside as long as 0.8855 support turned resistance holds.

In the bigger picture, the break of 0.8704 support argues that whole rise from 0.8399 has completed at 0.9410 already. Also, this indicates that fall from 0.9410 is likely the third leg of the correction pattern that started at 0.9799 and could extend beyond 0.8399 support before the whole correction concludes. On the upside, a break of 0.8855 support turned resistance is needed to be the first sign that EUR/GBP has bottomed out. Otherwise, outlook will remain bearish.


EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.4708; (P) 1.4739; (R1) 1.4755.

EUR/CHF breaches 1.4722 briefly today and at this point, intraday bias is cautiously on the downside. Another break of 1.4722 support will indicate that recent fall has resumed and should target 1.4577 key support next. On the upside, however, above 1.4781 resistance will indicate that a short term bottom is formed with bullish convergence condition in 4 hours MACD. In such case, stronger rebound should be seen to 1.4894/4988 resistance zone. But after all, that break of 1.4988 resistance is needed to indicate that EUR/CHF has bottomed. Otherwise, outlook will remain bearish and another fall should be seen after consolidations.

In the bigger picture, with EUR/CHF still staying well below 55 weeks EMA, fall from 1.5880 is likely still in progress. Current decline should have a test on 1.4577 support first and break will target 2008 low of 1.4315. On the upside, break of 1.5007 support turned resistance is needed be the first signal to indicate that fall from 1.5446 has finished and revive the case that 1.4577 is still in progress. Otherwise, medium term outlook will remain bearish.


GBP/JPY Daily Outlook
Daily Pivots: (S1) 147.69; (P) 148.47; (R1) 149.38.

No change in GBP/JPY's outlook as it's still bounded in converging range. Intraday bias remains neutral. Another rise cannot be ruled out and above 149.98 will target 150.68/153.21 resistance zone. But even in such case, upside should be limited there to conclude the whole consolidation from 139.96. On the downside, below 147.10 will flip intraday bias back to the downside. Further break of 145.96 will affirm the case that rise from 139.26, as well as consolidation from 139.96 have completed at 150.68 already. Deeper decline should then be seen to 141.99 support first and then a retest on 139.26 low.

In the bigger picture, medium term rebound from 118.18, which is a correction to the long term down trend from 07 high of 251.90, has completed at 163.05 already. Fall from 163.05 is expected to resume after sideway consolidation from 139.69 completes and should target a new low below 118.81. However, note that sustained break of 61.8% retracement of 163.05 to 139.26 at 153.96 will argue that fall from 163.05 has finished already and will in turn indicate that rise from 118.81 is still in progress to another high above 163.05 before conclusion.

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FOREX REPORT / 22NDJAN

Mid-Day Report: Sterling Tumbles on M4 and Fiscal Concern
Quick update: Stocks turned red after poorer than expected Philly Fed index which dropped to 15.2 in January. DOW dropped more than -1% and triggers sharp rally in Japanese yen.

Sterling dropped sharply in European session today after data showed that M4 broad money supply had its sharpest monthly fall on record. M4 fell by -1.1% in December and rose 6.4% yoy, much worse than expectation of 0.9%mom and 8.9% yoy rise. The undesirably low money growth showed the lack of response in the market in spite of BoE's GBP 200b quantitative easing program. In addition, data also showed a net GBP 15.7b of public sector net borrowing in December, which is the higher on record in that month since 1993.

Data from US saw jobless claims rose to 482k. Eurozone PMIs were mixed and provided little support to Euro. Manufacturing PMI improved to 52 in January but services PMI dropped to 52.3. ECB monthly bulletin said that economic recovery in Eurozone economic recovery is likely to be moderate and uneven. Regarding fiscal imbalances, ECB said "the very large government borrowing requirements carry the risk of triggering rapid changes in market sentiment, leading to less favorable medium and long-term market interest rates. Regarding inflation, ECB warned that "the expected increase in headline HICP inflation in 2010, from an estimated annual rate of 0.9% in December 2009, should not be interpreted as a resurgence of underlying inflationary pressures."

Earlier today, Yen weakens mildly after solid data from China. China's GDP posted an impressive 10.7% qoy rise in Q4, faster pace since 2007. CPI rose much faster than expected by 1.9% yoy in December, the second straight gain after none months of decline. PPI rose 1.7% yoy after dropping for 12 months. Economists believe that the inflation trend is a deep concern of the Chinese government, as well the risk of asset bubbles. The strong growth and inflation data intensifies speculation that more tightening is around the corner.

Looking at the dollar index again, intraday bias remains on the upside as long as 78.22 minor support holds and current rise is expected to continue to 61.8% projection of 74.19 to 78.45 from 76.60 at 79.23 and then 38.2% retracement of 89.62 to 74.19 at 80.08. On the downside, below 78.22 will turn intraday bias neutral and bring consolidations. But pullback should be contained above 77.41 resistance turned support and bring rally resumption.

2010 Currency Outlook: GBP
Since January 2007, the pound has dropped -23.5% against its major trading partners with the decline against the euro slightly more than that against the dollar. Although the pound managed to gained against most of these partners in 2009, much of the return was erased in the second half of the year as BOE committed to adopt extremely loose monetary policies and economic contraction was more serious than previously anticipated.

In 2010, we expect the pound will remain weak in the first quarter there are still uncertainties in how the nation's economy will develop and whether the central bank will expand or unwind stimulus policies. However, things may be clearer towards the second half of the year. More rapid economic growth (compared both with 2009 and with other OECDs) and improvement in fiscal conditions may help lift the pound. That said, 2010 will be a year full of variables in the UK. Election, exit of monetary policies, return of VAT to 17.5%... are all important issues for British economy this year and their impacts on economic development and currency are yet to tell.


Economic outlook: Economy should have grown slightly in 4Q09 after contracting almost -6% in the first 3 quarters. Forward-looking indicators have been improving and net trades have been boosted by weakness in the pound (against a basket of currencies, sterling has dropped more than -20% since 2007 and -4.4% since July 2009). In 2010, recovery is expected to continue although the path should be gradual and bumpy - a situation similar to most advanced economies. The OECD forecast UK's GDP will expand +1.2% in 2010 and +2.2% in 2010, after tumbling -4.7% in 2009. These are compared with corresponding growths of +0.9% and +0.9% in the Eurozone and +2.5% and +2.8% in the US.

The UK inflation jumped +2.9% yoy in December, +1% higher than the increase in November, as oil price rallied while reduction in sales tax in 2008 was not repeated. This is the first time since May that inflation has exceeded BOE's target of 2% and we forecast the rise may speed up in coming months as VAT has returned to 17.5%, from 15% last year, since January 2010. However, this is premature to predict an early tightening by the central bank. In fact, the MPC expected a spike in CPI. At November's inflation report, the BOE said that inflation will accelerate and then dip below the 2% target and the rate will not return to the target until 2012

Labor market in the UK has been resilient. The -15.2K decline in claimant count in December was the biggest drop since early 2007. Moreover, the decline in ILO unemployment rate to 7.8% in the September-November period from 7.9% in the August-October period also evidenced that the job market has performed better than expected since the beginning of the recession

Monetary Policy: Same as its counterparts in the advanced economy, the UK implemented a series of conventional and unconventional measures to stimulate growth. The BOE cut its policy rate to from 5% to 0.5% in the 5-month period from October 2008 to March 2009. The interest rates are expected to stay unprecedentedly low until at least late-2010. Moreover, policymakers also started buying assets in March 2009 and the size was increased from 75B pound in the beginning to 125B pound in May, 175B in August and then 200B pound in November.

It's a difficult task to forecast the BOE's policy as it surprises the market very often! In July, the market had expected the BOE would extend the asset buying program by 25B pound because it would be ending at the end of July, before the August meeting. Therefore, in order to avoid discontinuity, it's tactical for the central bank to extend the plan to 150B pound which was the total amount authorized by the Chancellor at that time. However, the outcome was that the MPC members decided to stick to 125B pound (May's decision).

After the meeting, the market widely anticipated the BOE would slow down the pace of purchases so that the whole program would extend beyond the meeting on August 6-until policymakers could acquired more information, from the Quarterly Inflation Report in August, on the impact of the existing monetary and quantitative easing policies.

While the market had expected the BOE would put everything on hold in August, it extended the asset purchase program by 50B pounds to 175B pound as 'the recession appears to have been deeper than previously thought. GDP fell further in the second quarter of 2009. But the pace of contraction has moderated and business surveys suggest that the trough in output is close at hand. Underlying broad money growth has picked up since the end of last year but remains weak. And though there are signs that credit conditions may have started to ease, lending to business has fallen and spreads on bank loans remain elevated'.

Another move was seen in November when the BOE raised the size of the program by another 25B pound to 200B pound, probably because the unexpected economic contraction in 3Q09 suggested dismal outlook in the country.

The next move will be in February when the Quarterly Inflation Report will be released. We and the market expect policymakers will announce a pause in QE at the meeting. A 'pause' in QE has good and bad implications. The good thing is that the BOE may think that there's evidence that economy in the UK has shown signs of improvement and previous easing programs are sufficient to drive growth. Moreover, putting an end to liquidity provision should be supportive for sterling which was being dumped in the second half of 2009 due to BOE's aggressive QE. On the other hand, if the BOE announces it a 'pause', it means there's possibility for further extension of the program should the economy deteriorate. While both the ECB and the FED have shown signs of unwinding their liquidity programs, potential expansions of QE by the BOE is really negative.

The BOE's monetary policy will even be harder to gauge this year as fiscal and political issues are playing important roles in the monetary outlook. In short, substantial fiscal tightening will prolong the accommodative monetary situation while how aggressively the government will work to cut the budget deficits greatly depends on which party wins the General Election which must occur by June 3, 2010.


Fiscal Policy and Election: The UK is running at huge deficits and the government said in the Pre-Budget Report public sector net borrowing (PSNB) will increase to 12.6% of GDP in 2009/10 while public sector net debt (PSND) will rise to 55.6% of GDP during the period. While the former should be more than halved by 2013/14, the latter will probably surge to 77.7% by 2014/15. IMF forecast in October that UK's net debt will rise to 75% of GDP in 2010 before 2010.

Credit agencies have warned that the nation's deficit problem is hurting its credit rating. While Moody's said on December 8 that the UK may test the 'Aaa boundaries', S&P lowered the outlook on the country's AAA rating 'negative' from 'stable' in May.

The 3 political parties in the UK have pledged to tighten fiscal policy as economic recovers but the Conservative party appears to be the most aggressive one regarding the issue. The opposition party said the current Labor government's plan to halve the deficit in 4 years is not enough and the cut needs to start immediately. Last week, the shadow Chancellor of Exchequer George Osborne said he will target programs that 'represent poor value for money' including spending on advertising and consultants. Tax credits for people earning more than 50 000 pounds and tax-free child trust funds for “better off families” will be cut' during the financial year. Currently, opinion polls show that the Conservatives are 10% ahead of the Labors in opinion polls.

The pound should be lifted with a hope of narrowing fiscal deficit. Therefore, it's possible for GBP to rebound after weakening in the first quarter, as election gets closer. However, the rise should not be too strong as fiscal tightening may hinder economic recovery and prolong the low-rate monetary policy.

If the election result replicates the polls, a lead of around 9-10% should produce a Conservative majority. However, if that's not the case, a hung parliament, with no party with an outright majority, could cause sterling to fall as well as increase the difficulty in coming up with an agreed approach to tighten fiscal policies.

DISCLAIMER: Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. we assumes no responsibility or liability from gains or losses incurred by the information herein contained.

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INDIAN STOCK MARKET END-SESSION-21STJAN

Key benchmark indices extended losses for the third straight day on disappointing Q3 results from frontline companies. Markets across the globe were gripped with volatility as bullish economic data from China raised concerns Beijing may tighten policy. European markets were trading mixed after a firm start. Asian markets turned mixed after a weak start. The BSE 30-share Sensex declined 423.35 points or 2.42%.

The market breadth was extremely weak as small and mid-cap stocks underwent correction after a recent solid surge. Today's sell-off was wide-based with all the sectoral indices on BSE ending with losses. Shares from sectors related to infrastructure were the worst hit. L&T led decline in capital goods stocks after the engineering & construction major reported fall in third quarter sales revenue. Power equipment major Bharat Heavy Electricals also declined sharply as its third quarter revenue growth fell short of market expectations. ICICI Bank, too, was under selling pressure as third quarter net profit declined.

Power generation stocks dropped as investors shuffled their portfolios ahead of the upcoming mega follow-on-public (FPO) offer of NPTC. Banking shares were reeling under selling pressure ahead of the Reserve Bank of India's monetary policy review meet on 29 January 2010. Shares from metal, realty sectors and PSU stocks were not spared either.

The IPO of Jubilant Foodworks ended on Wednesday, 20 January 2010, with an oversubscription of 31.11 times. Foreign institutional investors (FIIs) made a beeline for the IPO. FIIs put in bids for 25.56 crore shares as compared to 71.41 lakh shares reserved for the qualified institutional investors segment as a whole. The strong response from FIIs indicates that global liquidity remains ample.

The food price index rose 16.81% in the 12 months to 9 January 2010, while the fuel index was up 6.34%, the government said on Thursday. The rise in food price index was lower than an annual rise of 17.28% in the previous week.

The annual wholesale inflation rose to 7.31% in December 2009, compared with 4.78% in November and 6.15% a year ago. Finance minister Pranab Mukherjee said on Wednesday the government was taking steps to contain inflation. The situation is constantly under review, he said. He also promised more measures to check the rise in the prices of essential commodities.

Food prices will cool off in 1-2 months and inflation will turn around, finance ministry's chief economic advisor Kaushik Basu said in a newspaper interview published on Wednesday. The Reserve Bank of India will hold its quarterly monetary policy review on 29 January 2010 and is widely expected to increase the cash reserve ratio (CRR) requirements for banks, but economists are divided on when it will raise interest rates. CRR is the level of cash that banks must keep in deposit with the central bank. Food prices rose near 20% in December from a year earlier, their highest in 11 years.

India's October-December 2009 quarter economic growth is expected to be lower than the previous quarter, chief statistician Pronab Sen said on Thursday, due to a contraction in farm output. Indian economy, which grew at 7.9% in the September quarter, is expected to grow 6-6.5% in the December quarter, Sen said.

He expects the Indian economy to grow at 6.5-7.5% for the fiscal year ending in March 2010. The annual farm output in the December 2009 quarter is expected to contract by 6-7%, he added. Monthly inflation may touch double digits by March 2010, Sen had said earlier this week

Union food and agriculture minister Sharad Pawar on Wednesday suggested that the prices of milk and related products were set to rise because of the demand-supply mismatch.

Aggregate results of 346 companies showed 58.20% advance in net profit on 9.5% rise in sales in quarter ended December 2009 over the quarter ended December 2008.

Excise, customs and service tax collections are continuing to show a negative growth. Excise duty collections between April to December 2009 are down by 13% at close to Rs 70,000 crore. Revenues by way of customs duty are also down by a whopping 28% at around Rs 59,000 crore while service tax collection is also down over 6% with the government collecting slightly over Rs 36,000 crore.

This takes the total collection of indirect taxes in the first nine months to about Rs 1,66,000 crore, down by 18% as compared to last fiscal. The government has set itself a target to collect around Rs 2,70,000 crore by the end of fiscal year ending March 2010.

Meanwhile, the government reportedly proposes to ease the norms for foreign direct investment (FDI) approval. Presently projects worth more than Rs 600 crore require the final approval of the Cabinet Committee on Economic Affairs (CCEA). The department of industrial policy and promotion (DIPP) has proposed that this ceiling be raised to anywhere between Rs 1,000 crore and Rs 1,500 crore. The new norms are likely to be notified after the introduction of a consolidated FDI policy framework on 1 April 2010.

FDI inflows increased to $27 billion in 2008-09 from $3.2 billion in 2004-05. During the period April-September 2009-10, FDI inflows reached $15 billion. The government has set a target of achieving $50 billion annual FDI by 2012 and $100 billion by 2017.

Economic growth will accelerate this year, Commerce and Industry Minister Anand Sharma said on Tuesday as he demanded better access to China's markets to help exports. Sharma's call for greater access for goods comes amid a widening trade gap between the two countries. Trade between the two grew rapidly to $50 billion in 2008, making China India's second-largest trading partner, but fell back to $43 billion in 2009 as global trade declined. Sharma called for more Chinese direct investment in India, especially in infrastructure, while noting that Indian firms are already present in China.

European shares were trading mixed on Thursday, continuing a choppy week for trading, with miners recouping some sharp losses made in the previous session. Key benchmark indices in Germany and France were up 0.06% and 0.32%. However, UK's FTSE 100 index fell 0.21%

Asian markets ended mixed. Key benchmark indices in Hong Kong, Singapore and Taiwan were down by between 1.13% and 1.99%. Japan's Nikkei 225 index rose 1.22% led by technology shares. South Korea's Seoul Composite index was up 0.45%. China's Shanghai Composite index added 0.22%.

Chinese data released Thursday were largely in line with expectations, showing economic growth powered higher in the fourth quarter, putting the full-year figure above forecasts. But inflation surprised to the upside, suggesting fiscal and monetary policy tightening could be ahead.

China's gross domestic product expanded at a rapid rate of 10.7% in the fourth-quarter of 2009 from the year-earlier period, pushing the full-year economic growth rate to a better-than-expected 8.7%, according to official data released Thursday.

Developing Asian economies face the risk of asset bubbles or overheating as the region's growth outpaces the rest of the world this year, the World Bank said in a report today. In South Asia, policy makers will be particularly responsive to signs of building inflationary pressures because of a strong aversion to food-price increases, the World Bank said.

US markets ended sharply lower on Wednesday, 20 January 2010, as earnings and the dollar's gains clipped the market's momentum. In earnings, Bank of America disappointed investors with a loss of $5.2 billion, which was worse than expected. Among others, Morgan Stanley's earnings fell short of analysts' expectations, but Wells Fargo posted an unexpected profit.

The Dow Jones industrial average lost 122.28 points, or 1.1%, to 10,603.15. The S&P 500 index fell 12.19 points, or 1.1%, to 1,138.04, and the Nasdaq Composite Index fell 29.15 points, or 1.3%, to 2,291.25.

Trading in US index futures indicated the Dow could fall 28 points at the opening bell on Thursday, 21 January 2010, reversing earlier gains. US stocks futures were firm earlier in the global day.

The World Bank raised its forecast for global growth in 2010 but warned that the recovery may lose momentum in the second half of the year as government stimulus programs wind down and unemployment persists. The world economy will expand 2.7% this year after the worst recession since the end of World War II, compared with an estimate in June of a 2% expansion, the Washington- based poverty-reduction agency said today in an annual report. Growth may reach 3.2% in 2011, the bank said.

The World Bank report also includes figures on last year's downturn, with an estimate that the global economy declined 2.2%, compared with the 2.9% decrease projected in June. Growth in emerging nations is expected to reach 5.2% this year, compared with a June estimate of 4.4%, the bank said. China will expand 9% this year and India 7.5%, it said.

The World Bank also raised its forecast for US growth in 2010 to 2.5% growth, after predicting 1.8% in June. Japan's gross domestic product will expand 1.3% this year, more than the 1% predicted in June. The euro area's economy is forecasted to grow 1%, compared with the earlier estimate of 0.5% expansion.

Speaking to a news agency on the anniversary of his first year in office US President Barack Obama urged lawmakers on Wednesday to agree quickly on core elements of healthcare reform, signaling he might support a scaled-back overhaul after his Democrats lost a key Senate seat.

Obama acknowledged that voter anger helped carry Republican Scott Brown to a stunning victory in Tuesday's Massachusetts election which has imperiled the president's healthcare effort and the rest of his legislative agenda.

The White House said it may retool its strategy for selling Obama's agenda while pressing ahead with his priorities of job creation, climate change and financial regulatory reform as well as healthcare.

Meanwhile British Prime Minister Gordon Brown in an article published in Asian Lite magazine marking the 60th anniversary of India becoming a republic said India is a 'modern global success story' that is marching toward prosperity.

Brown further said the relationship of one of the world's oldest democracies with one of the largest owes its foundations to our proud historic ties.

The BSE 30-share Sensex lost 423.35 points or 2.42% to 17,051.14. The Sensex opened unchanged from its previous close at 17,474.49, which was the day's high. Sensex fell 449.23 points at the day's low of 17,025.26 in late trade

The S&P CNX Nifty was down 127.55 points or 2.44% to 5094.15. Nifty January 2010 futures were at 5085, at a discount of 9.15 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment soared to Rs 1,11,117.17 crore from Rs 65,565.5 crore on Wednesday, 20 January 2010.

The market breadth, indicating the overall health of the market was extremely weak. On BSE, 2369 shares declined as compared with 579 that rose. A total of 51 shares remained unchanged.

The total turnover on BSE amounted to Rs 6185.96 crore as compared with Rs 6327 crore on Wednesday, 20 January 2010.

The BSE Mid-Cap index fell 2.39% to 6,858.73, outperforming the Sensex. The BSE Small-Cap index declined 2.47% to 8,760.99, underperforming the Sensex

BSE Auto index (down 1.42%), BSE IT index (down 1.42%) and BSE FMCG index (down 1.43%), outperformed the Sensex.

BSE Power index (down 3.47%), BSE Capital Goods index (down 5.15%), and BSE PSU index (down 2.98%), underperformed the Sensex

Bharti Airtel (down 2.93%), Tata Motors (down 2.84%), and HDFC (down 2.94%), edged lower from the Sensex pack.

Mahindra & Mahindra was the lone gainer from the 30-member Sensex pack. India's top tractor maker by sales gained 0.34% to Rs 1149.75. The stock staged a pullback from day's low of 1136.50. After market hours today, the company scheduled a board meet on 25 January 2010, to a stock-split proposal apart from considering its Q3 December 2009 results.

India's largest car maker by sales Maruti Suzuki India fell 1.25% on profit booking. The company announces its Q3 December 2009 results on 23 January 2010.

High beta infrastructure shares were the worst hit in today's sell-off. India's largest engineering & construction firm by sales Larsen & Toubro (L&T) slumped 6.63% to Rs 1527.95 and was the top loser from the Sensex pack. L&T said profit after tax from ordinary activities rose 15% to Rs 696 crore in Q3 December 2009 over Q3 December 2008. Gross sales revenue declined 6% to Rs 8139 crore. The result was announced during trading hours today, 21 January 2010.

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) fell 4.26%. The company's the net profit rose 35.67% to Rs 1072.59 crore on a 17.28% rise in total income to Rs 7422.51 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours today, 21 January 2010.

Power generation stocks declined as investors shuffled their portfolios ahead of the upcoming mega follow-on-public (FPO) offer of NPTC.

Tata Power Company (down 4.69%), Reliance Infrastructure (down 2.66%), CESC (down 2.01%), Torrent Power (down 2.77%), Reliance Power (down 2.36%), and NHPC (down 2.30%), declined.

India's largest power generation firm by total capacity NTPC was down 1.55%. The company FPO remains open between 3 and 5 February 2010. The pricing has not yet been announced by the company.

Japirakash Associates (down 2.48%), Lanco Infratech (down 5.52%), GMR Infrastructure (down 1.84%), Punj Lloyd (down 4.91%), and GVK Power Infrastructure (down 2.29%), declined.

Realty shares were not spared either. DLF (down 2.69%), Unitech (down 2.29%), HDIL (down 3.98%), Indiabulls Real Estate (down 3.90%), and Omaxe (down 3.84%), declined.

India's largest private sector bank by net profit ICICI Bank lost 3.32%. The bank's net profit declined 13.44% to Rs 1101.06 crore on a 25% fall in total income to Rs 7762.71 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours today, 21 January 2010.

India's largest bank by net profit and branch network State Bank of India lost 1.76%.

India's second largest private sector bank by net profit HDFC Bank slipped 2.26% after its American depository receipt shed 1.56% on Wednesday.

Metal stocks declined after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 2.12% on Wednesday, 20 January 2010. Hindalco Industries (down 1.06%), Tata Steel (down 0.70%), Hindustan Zinc (down 3.09%), Sesa Goa (down 3.96%), and National Aluminum Company (down 4.42%), edged lower.

India's largest non-ferrous metal producer by sales Sterlite Industries India lost 3.70% after its American depository receipt or ADR dropped 5.23% to $18.11 on the New York Stock Exchange on Wednesday, 20 January 2010.

Index heavyweight Reliance Industries (RIL) shed 1.97% to Rs 1056.25. Reports indicated that RIL is unlikely to raise its offer price to take a controlling stake in LyondellBasell Industries. Lyondell's current restructuring plan values it as high as $15.5 billion. Recently, RIL had reportedly sweetened its initial $12.0 billion offer to about $13.5 billion for acquiring LyondellBasell. RIL will announce its Q3 result on Friday, 22 January 2010.

India's largest oil exploration firm by sales Oil & Natural Gas Corporation was down 1.98% to Rs 1140, off day's high of Rs 1180. The company posted a 23% rise to Rs 3054 crore on 24% rise in net sales to Rs 15373 crore in Q3 December 2009 over Q3 December 2008. The results were announced after market hours today, 21 January 2010.

Cairn India fell 3.37% on reports the Comptroller and Auditor General of India, the country's statutory auditor, has sought government intervention to access financial records of the company's Rajasthan oil fields.

India's second largest mobile services provider by sales Reliance Communications (RCom) fell 0.99%. As per reports, the company has written to the Department of Telecom (DoT) asking it to reject the report submitted by the Government-appointed auditors. In a 28-page letter to the DoT, the company said that the report was based on uncorroborated facts and contrary to the all norms of audit and professional conduct.

Earlier the independent auditor - Parakh & Co - appointed by the DoT to examine the accounts of RCom had concluded that the company has under-reported revenues of Rs 2,799 crore to the Government, resulting in under-payment of Rs 315 crore as license fee and spectrum charges during 2006-08.

IT stocks succumbed to selling pressure in late trade after a firm start. The rupee fell to two-week lows against the dollar today, 21 January 2010.

India's largest IT exporter by sales Tata Consultancy Services fell 0.85% to Rs 772, off day's high of Rs 790.90. The third quarter earnings unveiled by the company after trading hours on 15 January 2010 surpassed market estimates as demand for outsourcing surged and prices stabilised, fuelling hopes of recovery in the showpiece sector.

India's second largest IT exporter by sales Infosys fell 1.39% to Rs 2616, after hitting a day's high of Rs 2663. On 12 January 2010 Infosys raised its full-year revenue and profit outlook after strong Q3 results and on improving trend for outsourcing orders.

India's third largest software services exporter Wipro lost 2.21% to Rs 709.40, easing from day's high of Rs 739. The company's consolidated net profit rose 21.26% to Rs 1217.40 crore on 4.17% rise in total income to Rs 7055.80 crore in Q3 December 2009 over Q3 December 2008. The company announced the results before trading hours on 20 January 2010.

Chief Financial Officer Suresh Senapaty said in a statement that the key financial services sector had bounced back on the back of strong outsourcing demand.

Financial Technologies (India) rose 0.76%. The company will declare Q3 December 2009 results on 29 January 2010.

The partially convertible rupee was at 46.01/02 after falling to 46.06 in early deals, which was its lowest since 6 January 2010. It had ended at 45.93/94 per dollar on Wednesday, 20 January 2010.

A weak rupee boosts operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Larsen & Toubro was the top traded counter on BSE with turnover of Rs 243.07 crore followed by Jai Corp (Rs 182.84 crore), Tata Steel (Rs 160.12 crore), Rashtriya Chemicals & Fertilisers (Rs 150.88 crore) and Bombay Dyeing & Manufacturing Company (Rs 103.32 crore).

Rashtriya Chemicals & Fertilisers reported a highest volume of 1.43 crore shares on the BSE. Unitech (73.77 lakh shares), Suzlon Energy (69.01 lakh shares), Lanco Infratech (67.25 lakh shares), and Ispat Industries (63.30 lakh shares), were the other volume toppers on the BSE.

Dr.Reddy's Laboratories slumped 6.55% after the company's American depository receipt, ADR tumbled 6.46% to $24.48 on the New York Stock Exchange on Wednesday, 20 January 2010 following poor Q3 December 2009 results announced during market hours on Wednesday, 20 January 2010.

Jindal Poly Films jumped 2.96% after the company's board approved buyback of up to 22 lakh equity shares at a ceiling price of Rs 450 per share. The announcement was made after market hours on Wednesday, 20 January 2010.

Raymond spurted 9.20% after the company reported a net profit of Rs 42.57 crore in Q3 December 2009 compared with a net loss of Rs 15.20 crore in Q3 December 2008. Net sales rose 5% to Rs 372.33 crore in Q3 December 2009 over Q3 December 2008. The result was announced after trading hours on Wednesday, 20 January 2010.

Private sector air carrier Jet Airways India jumped 3.21%. The company will declare Q3 December 2009 results on 25 January 2010.

Diversified agricultural products maker Jain Irrigation Systems moved up 1.40%. The company will declare Q3 December 2009 results on 28 January 2010.

Fertiliser maker Chambal Fertilisers & Chemicals climbed 2.06%. The company will declare Q3 December 2009 results on 23 January 2010. Fertiliser maker Rashtriya Chemicals and Fertilisers flared up 1.09%. The company will declare Q3 December 2009 results on 29 January 2010.

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