A bumpy start!

When one is happy there is no time to be fatigued; being happy engrosses the whole attention.

Looks like the bulls are suffering from fatigue after a seven-month rally. Most of the good news appears to have been discounted. The road ahead will be a little bumpy as the bulls look for incremental positive news. Today we expect the market to open on a cautious note amid mixed global cues. Stocks in the US and Europe closed in the red on Friday. Asian markets are bit of a mixed bag. The choppy trend may continue till the earnings and other near-term triggers are digested.

However, liquidity is abundant and risk appetite is showing no signs of abating anytime soon. Overall, there aren’t too many headwinds that could upset the current momentum. At the same time, valuations are not cheap. The Nifty could swing in a 5000-5100 range in the near term. On the downside, watch out for 4940 and 4825.

Banks will be in the limelight ahead of tomorrow’s RBI policy review. The central bank is unlikely to jack up rates though it may hint at a change in stance as inflation is starting to inch up. Aside from earnings, other events to watch out for this week are the F&O expiry and US GDP data. FII flows will continue to play a key role. Another positive is that the leverage is low from bull market peaks.

FIIs were net sellers in the cash segment on Friday at Rs4.79bn on a provisional basis. The local funds were net buyers of Rs1.73bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs727.4mn. On Thursday, the foreign funds were net sellers of Rs2.96bn in the cash segment. Still, their net investments in Indian stocks this year remains above $14bn. Mutual Funds were net sellers at Rs5.58bn on Thursday.

Results Today: Aban Offshore, Areva T&D, Bharati Shipyard, Blue Star, Bosch, Canara Bank, Castrol India, Dabur India, Dena Bank, Engineers India, ENIL, Geometric, GMR Infra, GMDC, Hindustan Motors, Hinduja Ventures, HT Media, IDBI Bank, Idea Cellular, JB Chemicals, Kalindee Rail, Kalpataru Power, Lupin, M&M Financial, Mahindra Lifespaces, Mindtree, Neyveli Lignite, NIIT, OBC, Ranbaxy, REI Agro, Sona Koyo, SREI Infra, Tata Comm, Tata Elxsi, Tata Motors, Texmaco, TV Today, Union Bank, Uniphos Enterprises, United Spirits, UB Holding, UB, United Phosphorus, Vakrangee Software, Welspun Gujarat, Wipro and Whirlpool India.

US stocks closed lower on Friday, reversing the week's gains, as shares of energy and natural resources slipped in line with crude oil and other commodities. The selloff in energy, materials and industrials sectors was triggered by a rise in the dollar.

The Dow Jones Industrial Average fell 109.13 points or 1.1% to close at 9,972.18. The broader Standard & Poor's 500 Index shed 13.31 points or 1.2% on the day to shut shop at 1,079.60. The Nasdaq Composite Index dropped 10.82 points or 0.5% to 2,154.47.

Stocks had risen in the morning after Microsoft and Amazon.com announced upbeat earnings, and existing home sales rebounded to highest level in two years. But the tone turned negative in the afternoon.

US stocks had rallied on Thursday following upbeat earnings from 3M, AT&T and other blue chips. The advance propelled the Dow back above 10,000 and the S&P 500 closer to 1,100. Since bottoming at a 12-year low on March 9, the S&P 500 has surged over 62% through its rally high earlier this week.

Friday's losses dragged the key US stock indices down for the week after two weeks of gains, as traders turned cautious after better earnings had driven stocks to new yearly highs earlier in the week.

For the week the Dow was down 0.2% while the S&P 500 lost 0.7%, and the Nasdaq declined 0.1%.

Exxon Mobil and Schlumberger led energy shares lower after crude slid for a second day and the dollar rebounded. Industrial shares in the S&P 500 lost 1.7% as a group, led by railroad stocks, after Burlington Northern Santa Fe Corp. forecast profit below analyst estimates.

The Dow Jones Transportation average, which includes railroads, truckers and airlines, shed 3.5%.

Technology shares posted the smallest drop among 10 S&P 500 groups, as Microsoft and Amazon.com surged on better-than-estimated earnings.

The KBW Bank index, which tracks 20 financial firms lost 1.6% after rallying over 140% between March and its peak this week.

Microsoft reported weaker quarterly sales and income that easily surpassed analysts' estimates. Cost cutting and strong sales of its Windows operating system fueled the advance. On Thursday, Microsoft rolled out its new Windows 7 operating system.

Shares of Microsoft, a Dow component, rose over 9% Friday morning, touching a one-year high, before giving up nearly half of that advance.

Late on Thursday, Dow component American Express reported weaker quarterly sales and earnings that beat analysts' forecasts. Its shares fell 5% on Friday.

Also late on Thursday, Amazon.com reported a big surge in earnings and revenue, thanks in part to strong sales of its e-reader, Kindle. Shares jumped 27% on Friday, hitting a ten-year high.

All but 20 of the 138 companies in the S&P 500 that reported third-quarter results this week beat the average analyst estimate, including Apple, Caterpillar and Morgan Stanley. So far, 199 companies, or 40% of the S&P 500, have reported results.

Profits are currently on track to have fallen 18.2% versus a year earlier, according to the latest from Thomson Reuters. Revenue is expected to have dropped over 10% from a year ago.

Federal Reserve chairman Ben S. Bernanke said that the financial turmoil is abating, but that lawmakers have to reform the system to help prevent a crisis of this magnitude happening again. On Thursday, the Fed proposed a broad overhaul of pay policies at 28 of the largest US banks.

Also on Thursday, White House "pay czar" Kenneth Feinberg called for the seven biggest recipients of federal bailout money to cut in half what they pay their top executives.

In the day's economic news, existing home sales jumped to a 5.57 million unit annual rate in September, according to a National Association of Realtors report. Sales were expected to have risen to a 5.35 million unit annual rate from 5.1 million unit annual rate in August.

Treasury prices tumbled, raising the yield on the 10-year note to 3.48% from 3.42% late on Thursday.

The US dollar bounced back from one-year lows against a slew of other currencies. A strong dollar pressures dollar-traded commodities including crude oil, which in turn drags on energy shares. The dollar gained versus the euro, after falling to a 14-month low earlier in the week. The dollar gained versus the yen.

US light crude oil for December delivery fell 69 cents to settle at US$80.50 a barrel on the New York Mercantile Exchange, edging off a one-year high.

COMEX gold for December delivery fell US$2.20 to settle at US$1,056.40 an ounce. Gold has surpassed records repeatedly this month due to the weak dollar and longer-term worries about inflation.

European shares ended mostly lower on Friday, ending a volatile week dominated by corporate financial results. The Dow Jones Stoxx 600 index fell 0.45% to 245.12 marking the third successive decline for the pan-European benchmark.

The UK's FTSE 100 index rose 0.7% to 5,243, while Germany's DAX index fell 0.39% to 5,740 and the French CAC-40 index lost 0.33% to 3,808.

The run ahead of fundamentals came to a halt with key indices closing lower this week. Besides the expected profit taking after as even-month rally, the RIL-RNRL court battle added to the weakness. Quarterly numbers from India Inc. also failed to cheer sentiment on Dalal Street. Finally, the BSE benchmark Sensex closed the week down by 3% and NSE Nifty closed lower by 2.8%.

The BSE Sensex hit an intra-week high of 17,457 and low of 16,721 while, the NSE Nifty hit an intra-week high of5,182 and low of 4,968.

The Foreign Institutional Investors (FIIs) purchased Rs51.2bnduring the week. On the other hand, the Domestic Institutions were net sellers to the tune of Rs15.7bn during the week.

The top gainers: The top gainers in the Sensex were TCS (up 10%), Tata Power (up 6.7%), DLF (up 4.9%),Hindalco (up 4.8%) and Wipro (up 2.4%).

The Top Losers: The top losers in the Sensex were Grasim (down 10.3%), Tata Steel (down 7.8%), Tata Motors (down 7.7%), L&T (down 7.2%) and Reliance Capital (down 6.9%).

On Friday, The BSE Sensex marginally gained 21 points at 16,810 after touching a high of 17,007 and a low of 16,765. The index opened at 16,795 against the previous close of 16,789. The NSE Nifty was up 10 points to shut shop at 4,998.

In Asia, the Nikkei in Japan was up 0.2%, while Australia's S&P/ASX ended higher by 1% at 4,859. Shanghai SE Composite in China gained 0.6% and Hang Seng index in Hong Kong was up 1.7%.

In Europe, stocks were in the positive terrain. The FTSE in the UK was up 1.2%, The DAX in Germany was up 1% and the CAC 40 index in France was up 1%.
Coming back to India, among the BSE sectoral indices, the FMCG index was the top gainer, adding 3%, followed by the Pharma index that was up 2% and the BSE IT index was up 2%.
Among the major losers were, BSE Oil & Gas index was down 3% and BSE Capital Goods index down 1.5%.

The BSE Mid-Cap index gained 1% and the BSE Small-Cap index was up 0.3%.

Among the 30-components of Sensex, 18 stocks ended in the green and 12 ended in the negative terrain. ITC, M&M, Tata Power, Hindalco and Infosys were among the major gainers.

On the other hand, among the major laggards were Reliance Industries, Grasim, Tata Motors and L&T.

Outside the frontline indices, the big gainers in the broader market were Jubilant Org, Asian Paints, Piramal Health and IRB Infra. On the other hand, losers included Sintex Indus, Hind Copper, Jai Corp and Marico.