Profit taking may pull the market lower after strong gains in the past three days as trading resumes after an extended weekend. The S&P CNX Nifty futures for December 2009 expiry were trading 13 points higher in Singapore.
Trading resumes today after a four-day break. The market remained closed on Friday, 25 December 2009 for Christmas holiday and on Monday, 28 December 2009 on account of Moharram
Trading volumes are likely to take a hit in the last week of the calendar year 2009 as most foreign fund managers will be on year-end vacation. The market is closed on Friday, 1 January 2010 for New Year holiday.
Volatility may zoom as traders roll positions in the derivative segment from December 2009 series to January 2010 series ahead of the expiry of the near-month December 2009 contracts on Thursday, 31 December 2009.
Telecom stocks may hog limelight on reports the much-awaited auction of spectrum for third generation (3G) mobile services would be delayed by over a month and is likely to start by the end of February 2010.
Meanwhile, India and Japan signed two important agreements on Monday for implementing the ambitious Rs 3.6 lakh crore Delhi-Mumbai Industrial Corridor (DMIC) project which seeks to create integrated investment regions and industrial areas across six states.
The agreements include collaborating in the development of eco cities that are environmentally and ecologically sustainable along the corridor and setting up of a project development fund to undertake activities like master planning & feasibility studies, preparing project reports and obtaining approvals and bid process management for projects.
India's infrastructure sector grew an annual 5.3% in November 2009, Trade Minister Anand Sharma said on Thursday. Infrastructure sector output grew 3.5% in October 2009 from a year earlier. The sector accounts for 26.7% of the country's industrial output.
Food price index rose 18.65% in the 12 months to 12 December 2009, data released by the government on 24 December 2009, showed. The primary article index jumped 14.66% and the fuel price index rose 3.95%. The worst monsoon in nearly four decades and flooding in some parts of the country have pushed up food prices.
Finance Minister Pranab Mukherjee said last week that containing inflation and cutting fiscal deficit are the major challenges for the government in the short-to-medium term. Mukherjee added that the government is open to altering the proposed draft direct tax code further informing that sustaining high economic growth remains a priority for the government. The draft code has proposed various reform measures, including cutting in corporate tax rate to 25% and streamlining tax laws.
The Indian economy can grow at 7.75% in the fiscal year ending March 2010, the Finance Minister said. He also told an industry conference in New Delhi that agriculture output must grow 4% for the economy to expand 9-10% annually. The government will wait until the February 2010 budget to consider withdrawing some of the fiscal stimulus measures, the Finance Minister said.
The latest data showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.
Asian stocks were trading lower today, 29 December 2009 on profit booking after a recent rise. Key benchmark indices in Hong Kong, Japan, South Korea, China, and Taiwan were down by between 0.06% to 0.74%. However Singapore's Straits Times index rose 0.08%.
US markets rose on Monday, 28 December 2009, after sales figures showed shoppers spent more freely this holiday season, a sign that consumers are feeling better about the economy.
The Dow Jones Industrial Average added 26.98 points, or 0.3%, to 10,547.08. The Standard & Poor's 500 Index rose 1.30 points, or 0.1%, to 1,127.78, and the Nasdaq Composite Index added 5.39 points, or 0.2%, to 2,291.08.
Short-term US interest rate futures prices fell Monday, continuing a trend from before Christmas that had the market participants believing that an improving economy will require higher rates. The July 2010 fed-funds contract, at Monday's settlement, priced in a 76% chance for the Fed to raise the Fed funds rate to 0.5% at its late June 2010 policy meeting, from the current historically low range of 0% to 0.25%. The same contract priced in a 64% chance for a 0.5% rate, as factored into the Christmas Eve settlement price, and a 50% chance as priced into Wednesday's (23 December 2009) settlement.
Even the May 2010 fed-funds contract is not ruling out the possibility of a rate increase as soon as the late April 2010 Federal Open Market Committee (FOMC) meeting. May 2010 fed funds, at Monday's settlement, priced in a 14% chance for a 0.5% rate, up from only a 6% chance on Christmas Eve.
Back home, the key benchmark indices extended gains for the third straight day on Thursday, 24 December 2009, on buying in index pivotals. The BSE 30-share Sensex was up 129.50 points or 0.75% to 17,360.61, its highest closing since 16 May 2008. The S&P CNX Nifty was up 33.80 points or 0.66 % to 5,178.40, its highest closing since 5 May 2008.
As per provisional data on NSE, foreign funds bought shares worth Rs 706.83 crore and domestic funds sold shares worth Rs 111.11 crore on Thursday, 24 December 2009.
DAILY MARKET COMMENTARY
28 December 2009
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro moved marginally higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4415 level and was supported around the $1.4355 level. Liquidity was light today as many market participants celebrating Boxing Day. Most dealers expect greater liquidity overnight during the Australasian session with liquidity returning to normal next Monday, the first full trading day of the year. Data released in the U.S. today saw the December Dallas Fed manufacturing activity index improve to 3.8% from the November reading of 0.3%. Tomorrow’s data will include the October CaseShiller home price index and December consumer confidence. On Wednesday, the December Chicago purchasing manager index will be released followed by Thursday’s data releases of weekly initial jobless claims and continuing jobless claims. The Federal Reserve today announced measures to absorb some of the US$ 1 trillion in excess reserves in the U.S. banking system. The program would involve selling term deposits in which excess cash would be put aside, easing downward pressure on the federal funds rate. The new program may be used in conjunction with the Fed’s previously announced plan to conduct reverse repo operations. Assets on the Fed’s balance sheet were little changed at US$ 2.24 trillion in the latest week. In eurozone news, European Central Bank President Trichet was on the tape reporting bloc members must reduce their budget deficits by 2011 and “live up to their role of providing credit to the economy.” Euro bids are cited around the US$ 1.3885 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.75 level and was supported around the ¥91.40 level. Data released in Japan overnight saw November industrial output up 2.6% m/m while November overall retail sales were off 1.0% y/y. Japan , China , Hong Kong , Korea , and other Asian countries agreed on a new US$ 120 billion measure today to address balance of payments and short-term liquidity difficulties in the region. Last week, finance minister Fujii reported Japan has “depleted most” of its special account funds and added it is difficult to compile a budget for fiscal year 2010. Fujii added monetary policy has been helpful in boosting the economy and that capital spending remains the worst part of the economy. Japanese government bonds sales are expected to reach a record ¥144.3 trillion. Minutes from Bank of Japan’s latest Policy Board meeting were released last week in which the government asked the central bank to monitor deflation. The minutes revealed “many” Policy Board members agreed “the bank would maintain its stance of responding promptly to changes in the market situation.” Policymakers said the central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets.” After an emergency meeting on 1 December, the central bank introduced a ¥10 trillion fixed-rate lending facility that was designed to arrest the yen’s advances and counter deflation. The central bank also characterized the most recent bout of deflation as “mild.” The Nikkei 225 stock index gained 1.32% to close at ¥10,634.23. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.90 level and was supported around the ¥131.35 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.65 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.65 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8302 in the over-the-counter market, up from CNY 6.8271. People’s Bank of China adviser Fan Gang said the yuan should not depreciated in the long-term but cited a risk the yuan may depreciate in the short term. Fan added China ’s GDP growth rate may be between 8% and 9% in 2010 and said export growth could reach double digits in 2010.
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6015 level and was supported around the $1.5930 level. BRC reported U.K. retailers expect 2010 to be a difficult year but don’t expect sales to fall from 2009 levels. Sterling liquidity was very light with Commonwealth and some European markets closed for the Boxing Day holiday. Cable is now up about thirteen big figures on a year-to-date basis. Many traders believe Bank of England’s Monetary Policy Committee will keep monetary policy unchanged until at least February when fourth quarter gross domestic product data are available along with the latest quarterly inflation forecast. Cable bids are cited around the US$ 1.5755 level. The euro moved lower vis-à-vis the British pound as cable tested bids around the ₤0.8980 level and was capped around the ₤0.9020 level.
(Bid Price) (Today’s Intraday Range )
EUR/ USD 1.4381 1.4413, 1.4353
USD/ JPY 91.61 91.76, 91.39
GBP/ USD 1.6001 1.6014, 1.5930
USD/ CHF 1.0343 1.0387, 1.0327
AUD/USD 0.8872 0.8890, 0.8825
USD/CAD 1.0423 1.0499, 1.0417
NZD/USD 0.7082 0.7094, 0.7049
EUR/ JPY 131.74 31.92, 131.37
EUR/ GBP 0.8984 0.9018, 0.8983
GBP/ JPY 146.60 146.67, 145.79
CHF/ JPY 88.54 88.65, 88.12
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.
Trading resumes today after a four-day break. The market remained closed on Friday, 25 December 2009 for Christmas holiday and on Monday, 28 December 2009 on account of Moharram
Trading volumes are likely to take a hit in the last week of the calendar year 2009 as most foreign fund managers will be on year-end vacation. The market is closed on Friday, 1 January 2010 for New Year holiday.
Volatility may zoom as traders roll positions in the derivative segment from December 2009 series to January 2010 series ahead of the expiry of the near-month December 2009 contracts on Thursday, 31 December 2009.
Telecom stocks may hog limelight on reports the much-awaited auction of spectrum for third generation (3G) mobile services would be delayed by over a month and is likely to start by the end of February 2010.
Meanwhile, India and Japan signed two important agreements on Monday for implementing the ambitious Rs 3.6 lakh crore Delhi-Mumbai Industrial Corridor (DMIC) project which seeks to create integrated investment regions and industrial areas across six states.
The agreements include collaborating in the development of eco cities that are environmentally and ecologically sustainable along the corridor and setting up of a project development fund to undertake activities like master planning & feasibility studies, preparing project reports and obtaining approvals and bid process management for projects.
India's infrastructure sector grew an annual 5.3% in November 2009, Trade Minister Anand Sharma said on Thursday. Infrastructure sector output grew 3.5% in October 2009 from a year earlier. The sector accounts for 26.7% of the country's industrial output.
Food price index rose 18.65% in the 12 months to 12 December 2009, data released by the government on 24 December 2009, showed. The primary article index jumped 14.66% and the fuel price index rose 3.95%. The worst monsoon in nearly four decades and flooding in some parts of the country have pushed up food prices.
Finance Minister Pranab Mukherjee said last week that containing inflation and cutting fiscal deficit are the major challenges for the government in the short-to-medium term. Mukherjee added that the government is open to altering the proposed draft direct tax code further informing that sustaining high economic growth remains a priority for the government. The draft code has proposed various reform measures, including cutting in corporate tax rate to 25% and streamlining tax laws.
The Indian economy can grow at 7.75% in the fiscal year ending March 2010, the Finance Minister said. He also told an industry conference in New Delhi that agriculture output must grow 4% for the economy to expand 9-10% annually. The government will wait until the February 2010 budget to consider withdrawing some of the fiscal stimulus measures, the Finance Minister said.
The latest data showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.
Asian stocks were trading lower today, 29 December 2009 on profit booking after a recent rise. Key benchmark indices in Hong Kong, Japan, South Korea, China, and Taiwan were down by between 0.06% to 0.74%. However Singapore's Straits Times index rose 0.08%.
US markets rose on Monday, 28 December 2009, after sales figures showed shoppers spent more freely this holiday season, a sign that consumers are feeling better about the economy.
The Dow Jones Industrial Average added 26.98 points, or 0.3%, to 10,547.08. The Standard & Poor's 500 Index rose 1.30 points, or 0.1%, to 1,127.78, and the Nasdaq Composite Index added 5.39 points, or 0.2%, to 2,291.08.
Short-term US interest rate futures prices fell Monday, continuing a trend from before Christmas that had the market participants believing that an improving economy will require higher rates. The July 2010 fed-funds contract, at Monday's settlement, priced in a 76% chance for the Fed to raise the Fed funds rate to 0.5% at its late June 2010 policy meeting, from the current historically low range of 0% to 0.25%. The same contract priced in a 64% chance for a 0.5% rate, as factored into the Christmas Eve settlement price, and a 50% chance as priced into Wednesday's (23 December 2009) settlement.
Even the May 2010 fed-funds contract is not ruling out the possibility of a rate increase as soon as the late April 2010 Federal Open Market Committee (FOMC) meeting. May 2010 fed funds, at Monday's settlement, priced in a 14% chance for a 0.5% rate, up from only a 6% chance on Christmas Eve.
Back home, the key benchmark indices extended gains for the third straight day on Thursday, 24 December 2009, on buying in index pivotals. The BSE 30-share Sensex was up 129.50 points or 0.75% to 17,360.61, its highest closing since 16 May 2008. The S&P CNX Nifty was up 33.80 points or 0.66 % to 5,178.40, its highest closing since 5 May 2008.
As per provisional data on NSE, foreign funds bought shares worth Rs 706.83 crore and domestic funds sold shares worth Rs 111.11 crore on Thursday, 24 December 2009.
DAILY MARKET COMMENTARY
28 December 2009
Fundamental Outlook at 1500 GMT (EDT + 0500)
€
The euro moved marginally higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4415 level and was supported around the $1.4355 level. Liquidity was light today as many market participants celebrating Boxing Day. Most dealers expect greater liquidity overnight during the Australasian session with liquidity returning to normal next Monday, the first full trading day of the year. Data released in the U.S. today saw the December Dallas Fed manufacturing activity index improve to 3.8% from the November reading of 0.3%. Tomorrow’s data will include the October CaseShiller home price index and December consumer confidence. On Wednesday, the December Chicago purchasing manager index will be released followed by Thursday’s data releases of weekly initial jobless claims and continuing jobless claims. The Federal Reserve today announced measures to absorb some of the US$ 1 trillion in excess reserves in the U.S. banking system. The program would involve selling term deposits in which excess cash would be put aside, easing downward pressure on the federal funds rate. The new program may be used in conjunction with the Fed’s previously announced plan to conduct reverse repo operations. Assets on the Fed’s balance sheet were little changed at US$ 2.24 trillion in the latest week. In eurozone news, European Central Bank President Trichet was on the tape reporting bloc members must reduce their budget deficits by 2011 and “live up to their role of providing credit to the economy.” Euro bids are cited around the US$ 1.3885 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.75 level and was supported around the ¥91.40 level. Data released in Japan overnight saw November industrial output up 2.6% m/m while November overall retail sales were off 1.0% y/y. Japan , China , Hong Kong , Korea , and other Asian countries agreed on a new US$ 120 billion measure today to address balance of payments and short-term liquidity difficulties in the region. Last week, finance minister Fujii reported Japan has “depleted most” of its special account funds and added it is difficult to compile a budget for fiscal year 2010. Fujii added monetary policy has been helpful in boosting the economy and that capital spending remains the worst part of the economy. Japanese government bonds sales are expected to reach a record ¥144.3 trillion. Minutes from Bank of Japan’s latest Policy Board meeting were released last week in which the government asked the central bank to monitor deflation. The minutes revealed “many” Policy Board members agreed “the bank would maintain its stance of responding promptly to changes in the market situation.” Policymakers said the central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets.” After an emergency meeting on 1 December, the central bank introduced a ¥10 trillion fixed-rate lending facility that was designed to arrest the yen’s advances and counter deflation. The central bank also characterized the most recent bout of deflation as “mild.” The Nikkei 225 stock index gained 1.32% to close at ¥10,634.23. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.90 level and was supported around the ¥131.35 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.65 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.65 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8302 in the over-the-counter market, up from CNY 6.8271. People’s Bank of China adviser Fan Gang said the yuan should not depreciated in the long-term but cited a risk the yuan may depreciate in the short term. Fan added China ’s GDP growth rate may be between 8% and 9% in 2010 and said export growth could reach double digits in 2010.
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6015 level and was supported around the $1.5930 level. BRC reported U.K. retailers expect 2010 to be a difficult year but don’t expect sales to fall from 2009 levels. Sterling liquidity was very light with Commonwealth and some European markets closed for the Boxing Day holiday. Cable is now up about thirteen big figures on a year-to-date basis. Many traders believe Bank of England’s Monetary Policy Committee will keep monetary policy unchanged until at least February when fourth quarter gross domestic product data are available along with the latest quarterly inflation forecast. Cable bids are cited around the US$ 1.5755 level. The euro moved lower vis-à-vis the British pound as cable tested bids around the ₤0.8980 level and was capped around the ₤0.9020 level.
(Bid Price) (Today’s Intraday Range )
EUR/ USD 1.4381 1.4413, 1.4353
USD/ JPY 91.61 91.76, 91.39
GBP/ USD 1.6001 1.6014, 1.5930
USD/ CHF 1.0343 1.0387, 1.0327
AUD/USD 0.8872 0.8890, 0.8825
USD/CAD 1.0423 1.0499, 1.0417
NZD/USD 0.7082 0.7094, 0.7049
EUR/ JPY 131.74 31.92, 131.37
EUR/ GBP 0.8984 0.9018, 0.8983
GBP/ JPY 146.60 146.67, 145.79
CHF/ JPY 88.54 88.65, 88.12
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.
