Bulls seek a foundation!

If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.

Consolidation seems to be the name of the game as bulls seek a strong foundation amid uncertainty over the prospects for 2010. Bulls and bears both seem to be lacking conviction for the moment; perhaps waiting for further clarity on economic recovery and corporate earnings. Events scheduled for this week and the month could help shape the opinion about the outlook in near future.

IIP data for November will be out on Tuesday while the monthly inflation report is due out on Jan. 14. Infosys, TCS, Bajaj Auto, HDFC Bank, Axis Bank and UltraTech Cement will announce results this week. Later this month, the RBI and the Fed will hold policy meetings. The ECB meets on Thursday but is unlikely to alter its monetary policy just yet.

We expect a slightly positive start as most Asian markets are in the green. Things should turn choppy again later in the day. Strength in brokerages has lifted China and Hong Kong after Beijing approved index futures. Chinese exports have rebounded and imports too have surged.

The Government will present its Union Budget on February 26 and is aiming at enacting legislation in the second half of this year for introducing a new Goods and Services Tax (GST), Finance Minister Pranab Mukherjee said on Saturday. He also said he is hopeful that growth rate could touch 8% in the fiscal year ending March 2010, faster than 6.7% in the previous year.

Results Today: Dhampur Sugar, Bihar Tubes and Exide.

FIIs were net buyers in the cash segment on Friday at Rs693.8mn on a provisional basis. The local funds were net buyers of Rs1.82bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs7.75bn. As per the SEBI figures, FIIs were net buyers of Rs3.02bn in the cash segment on Thursday.

US stocks recovered from a weak start to end higher on Friday, as investors shrugged off a surprising drop in payrolls last month. Technology shares rose and helped the broader market erase early losses.

The Dow Jones Industrial Average added 11 points, or 0.1%, to 10,618.19. The S&P 500 index gained 3 points, or 0.3%, to 1,144.98. The Nasdaq Composite index gained 17 points, or 0.7%, at 2,317.17.

The Dow and S&P 500 ended at 15-month highs and the Nasdaq at a 16-month high in the first trading week of 2010.

Following Monday's big rally, US stocks had been struggling in a range all through the last week, as investors chose to stay on the sidelines after last year's sensational turnaround. Nervousness about the jobs report also played a part in keeping further gains in check.

In the day's key economic report, US companies cut 85,000 jobs from their payrolls in December. The figure was a surprise to economists who were expecting no change in payrolls. On a more positive note, November's report was revised to show a gain of 4,000 jobs versus the initially reported loss of 11,000, breaking a 22-month streak of declines. The unemployment rate, generated by a separate survey, held steady at 10%, in line with forecasts.

Citigroup cut its fourth-quarter earnings forecasts on Goldman Sachs, Morgan Stanley and JPMorgan Chase, saying that fixed-income trading revenues fell in the fourth quarter and are set to fall an additional 15% to 20% in 2010. The companies are also likely to see weaker revenues from their commodity and currency units.

UPS announced that it was cutting 1,800 jobs as part of a restructuring and that it expects fourth-quarter earnings to top expectations. Shares gained about 5%.

A report released after the start of trading showed that wholesale inventories rose 1.5% in November after rising 0.6% in October. Economists thought inventories would fall 0.3%.

Another report release in the afternoon showed that consumer borrowing fell by US$17.5bn in November versus the US$5bn expected. Borrowing fell by US$3.5bn in the previous month.

The dollar tumbled versus the euro and the yen. Dollar-traded gold inched higher.

COMEX gold for February delivery rose US$5.20 to US$1,138.90 an ounce. Gold closed at an all-time high of US$1,218.30 an ounce last month.

US light crude oil for February delivery fell 9 cents to settle at US$82.75 a barrel on the New York Mercantile Exchange, further retreating from 15-month highs hit earlier in the week.

Treasury prices slipped, raising the yield on the 10-year note to 3.83% from 3.82% late on Thursday.

Europe stocks ended the week on a positive note on Friday, helped by a rally in bank shares. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 259.17, led by the financial sector, up 1.3%. It rose more than 2% this week.

Still, the index was briefly in the red earlier after the US Labor Department said 85,000 nonfarm jobs were lost in December, with an unemployment rate of 10%.

Eurostat reported that unemployment reached an 11-year high for the euro zone during November, also of 10%.

The UK's FTSE 100 index rose 0.1% to 5,534.24, while Germany's DAX index gained 0.3% to 6,037.61 and the French CAC 40 index added 0.5% to 4,045.14.

The key indices moved in a narrow range this week, but closed at a 22-month high largely due to gains on the first trading day of the year. Volumes were low as index stocks struggled for direction in a listless market, as investors chose to remain cautious ahead of results. Finally, the BSE Sensex rose 0.4% and the NSE Nifty gained 0.8% over the week.

On Friday, the BSE Sensex fell 75 points to end at 17,540 after touching a high of 17,606 and a low of 17,508. The Nifty declined 18 points to end at 5,244.

Equity markets in Asia ended in the green. The Nikkei in Japan was up 0.1.1%, while Australia's S&P/ASX ended higher by 0.3%. The Shanghai SE Composite declined 0.2% and Hang Seng index in Hong Kong gained 0.2%.

In Europe, stocks were trading higher. The DAX in Germany was up 0.3% and the CAC 40 index in France was up 0.5%. The FTSE in the UK was flat.
Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, adding 3.5%, followed by the Power index that was up 0.6% and the BSE Capital Goods index was up 0.5%. The BSE Mid-Cap index ended flat while BSE Small-Cap index was up 0.4%.

Among the 30-components of Sensex, 15 stocks ended in the negative terrain and 15 ended in the green. DLF, Grasim, Sun Pharma and JP Associates were among the top gainers.

On the other hand, among the major losers were Infosys, TCS, HDFC, RCom and Maruti.

Outside the frontline indices, the big gainers in the broader market were Hindustan Copper, REI Agro, IRB Infra, Bosch, Moser Baer and Sun TV. On the other hand, losers included Gujarat NRE Coke, AB Nuvo, HCL Tech and Max India.