Quality gains unlikely soon!

Quality is never an accident. It represents the wise choice of many alternatives.

The bulls and bears seem to be running out of alternatives. Another lackluster start and an equally insipid day of trade could be in store for us. Fatigue seems to be taking a toll on the bulls. The key indices are attempting to break out of a range where the correction had set-in last month. The trouble is there are no great events in the near term that could trigger a big push towards new highs. Winter session of parliament begins today.

What is favouring the bulls so far is the relentless inflow of overseas money. This may continue as the dollar is unlikely to rebound sharply. But, as Christmas holidays approach there is likely to be some softening even in these flows. Local funds have already turned net sellers. Add to this, the anxiety over the shape of the economic recovery and the market could see some cooling. Valuations for many of the leading stocks are not too compelling either. In the immediate future, the market will remain sideways and listless though action would be seen in non-index counters.

The Nifty could continue to struggle in the 5000-5100 range till a big rally materialises. Even then, the upside may not be much after having witnessed a stupendous rebound from bear market lows. We do not completely rule out a new 2009 high for the key indices before the end of December. Things could remain anemic early on in the new year as the market considers the latest quarterly results and a possible rate hike in January. Budget will of course be another event that will have a bearing on the market's behaviour in the near year.

Global markets have generally been moving in tandem since March lows. Apart from consistent signs of economic recovery another big factor behind this rally has been a weak US dollar. The yen carry trade has shifted into dollars, as the Fed keeps rates near zero. It is unlikely to press the 'exit' button from the accommodative policy until after the first half of 2010. This means that the dollar will remain under pressure and this in turn will continue to fuel the risky asset rally across the globe.

However, there concerns as to how the world will react once governments start withdrawing the emergency fire-fighting measures and the carry trades unwind. Inflation might rear its ugly head again and there could possibly be a few asset price bubbles. The so-called global imbalances will continue to pose problems.

FIIs were net buyers in the cash segment on Wednesday at Rs4.12bn on a provisional basis. The local funds were net sellers of Rs2.56bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs13.72bn. The foreign funds were net buyers of Rs594bn on Tuesday. Mutual funds were net sellers of Rs3.08mn in the cash segment on the same day. FIIs' net investments in Indian stocks this year has already crossed $15bn.

Hero Honda, Gokaldas Exports, Great Offshore, Bharati Shipyard and ABG Shipyard will be among the stocks that will be in the limelight. JSW Steel might continue to hog the limelight amid reports of a strategic alliance with a foreign partner.

After rallying for three straight days, bulls seem to have lost some steam as the BSE Sensex ended below the 17,000 mark, however, the NSE Nifty managed to hold on the 5050 mark. Weak cues from the Asian and the European markets coupled with selling pressure in the Oil & Gas and the Banking stocks dragged the Sensex to end below the 17,000 levels.

The BSE Sensex slipped 52 points to end at 16,998 after touching a high of 17,098 and a low of 16,958. The index opened at 17,050 against the previous close of 17,050. The NSE Nifty ended flat at 5,054.

In Asia, the Nikkei in Japan was down 0.6%, while Australia's S&P/ASX ended marginally higher by 0.2% at 4,739. Shanghai SE Composite was up 0.5% and Hang Seng index in Hong Kong fell 0.3%.

In Europe, stocks were trading in the green. The DAX in Germany was up 0.6% and the CAC 40 index in France was up 0.5%. The FTSE in the UK was up 0.2%.

Coming back to India, among the BSE sectoral indices, the Oil & Gas index was the top loser, shedding 1%, followed by the Banking index that was down 0.91% and the BSE Capita Goods index was down 0.7%.

Major gainers were BSE Metals index up 1.2% and BSE FMCG index up 0.6%.

The BSE Mid-Cap index ended flat while the BSE Small-Cap index was up by 0.7%.

Among the 30-components of Sensex, 18 stocks ended in the red and 12 ended in the positive terrain. Reliance Infra, L&T, Reliance Industries, ICICI Bank and Grasim were among the top losers. On the other hand, among the major gainers were Tata Motors, Tata Steel, ITC, Infosys and JP Associates.

Outside the frontline indices, the big losers in the broader market were Mphasis,Exide Ind, Spice Tele, Jain Irrigation and Fin Tech. On the other hand, gainers included Pantaloon Retail, GE Shipping, GTL Infra and Sintex Ind.

Shares of SAIL advanced by 0.5% to end at Rs187. Reports stated that Jharkhand government has agreed to renew the company’s lease for the Buddhaburu mine, having reserves of 810mn tons.

The company also announced that it was planning to spend Rs600bn for expansion in next 3 years and the company is also reportedly planning to jointly develop a limestone project at Arki in Himachal Pradesh with a 3MTPA capacity.

BHEL announced that it formed a joint venture with Madhya Pradesh Power Generation for 1600MW power plant. Shares of BHEL ended flat at Rs2275. The stock opened at Rs2273 and made an intra-day high of Rs2283 and a low of Rs2255. Total traded volumes stood at 0.11mn shares.

Union Bank of India plans to raise US$500mn by selling bonds by March; the Chairman M.V. Nair was quoted as saying. The bank plans to use the proceeds to fund its overseas operations

The stock ended at Rs270 adding 1.7%, it opened at Rs266 and made an intra-day high of Rs271 and a low of Rs262. Total traded volumes stood at 0.11mn shares.

Wockhardt announced that it launched anti-hypertensive drug Nicardipine injections in USA. The stock erased early gains and ended lower by 1.5% at Rs180 after it opened at Rs183. It made an intra-day high of Rs187 and a low of Rs179. Total traded volumes stood at 0.14mn shares.

Shares of Redington surged by over 3% to end at Rs316 after 2.2% of its equity, or ~1.7mn shares were traded in a single block on the BSE. The deal was transacted at an average price of Rs310 per share on the BSE.

The stock opened at Rs307 and made an intra-day high of Rs324 and a low of Rs306. Total traded volumes stood at 1.9mn shares.

Lloyd Electric & Engineering announced that through Janka Engineering s.r.o., (a wholly owned subsidiary company) having its registered seat at Prague, Czench Republic has signed a purchase agreement for the acquisition of assets (no liabilities) with Trademarks and 'JANKA' brand of Janka Radotin a.s., a leading czech based manufacturer of diversified Air Handling Product portfolio well positioned in the Czech market for a total consideration of approx. Euro 3.66mn, which is subject to the adjustment on the closing date.

The stock rose over 2% to end at Rs55.5. The stock opened at Rs54.6 and made an intra-day high of Rs56.85 and a low of Rs53.60. Total traded volumes stood at 0.18mn shares.