Risky assets such as emerging markets have been volatile in recent weeks as investors assess whether or not the US will enter a double-dip recession. “It’s quiet today following the boost from the positive US employment data last week, liquidity will be low with the US holiday,” said James Lord, emerging markets strategist at Morgan Stanley.

“Macroeconomic data will be closely watched to see if the scare we’ve had over global growth is over. The Fed’s Beige Book survey on Wednesday could be one of these indicators of direction.” The MSCI emerging equities index rose 0.8 percent to four-week highs and the Thomson Reuters emerging Europe index gained 0.2 percent, also to four-week highs. Emerging sovereign debt spreads tightened by 1 basis point to 276 bps over US Treasuries.

Sovereigns are looking to issue Eurobonds, taking advantage of spreads below the key 300 basis point level and the end of the vacation period for investors. The Czech Republic has tightened guidance by five bps on a 2021 euro-denominated bond to mid-swaps +110/115 bps and orders already total more than 2 billion euros, according to Thomson Reuters service IFR.

Montenegro set guidance on a debut Eurobond at a yield in the low 8 percent area for a 200 million euro five-year issue. Other potential issuers in the next few weeks include Lithuania, Nigeria and Ukraine.

Emerging market currencies were generally stronger. The Polish zloty hit a four-month high against the euro, boosted by strong growth data released last week. The rand hovered near 2-1/2 year highs, helped by strength in the gold price, even though South Africa’s central bank is expected to cut interest rates by 50 basis points to 6.0 percent later this week.

The Turkish lira hit a 2-1/2 week high against the dollar ahead of local holidays later this week, though Turkish stocks eased from record highs hit on Friday on Turkey’s domestic recovery and strong banking sector. Uncertainty may creep into Turkish markets, analysts said, as Turks vote on Sept 12 on constitutional reforms, a key test for the ruling AK Party’s reform process and its popularity before a parliamentary election in 2011.

The Romanian leu edged up against the euro after hitting two-month lows last week following a government reshuffle that included the replacement of the finance minister. Romanian five-year credit default swaps fell to 377.5 basis points from 383.8 bps on Friday, according to Markit, representing an easing off in debt insurance costs. Analysts stayed cautious, however.

“We remain defensive on the leu, particularly ahead of a potential no-confidence vote in the autumn,” said analysts at BNP Paribas in a client note. The Ukrainian hryvnia also hit a two-month low in the aftermath of the resignation last week of the central bank’s First Deputy Chairman Anatoly Shapovalov. The central bank intervened to defend the currency on Friday, and generally keeps the hyrvnia in a tightly-managed band.
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Selling pressure in gold gathered momentum as metal prices fell in global markets after a rally in equities reduced demand for the precious metal as a haven.

Gold in global markets, which normally sets a price trend on the domestic front here, fell by $4.70 to $1,246.60 an ounce.

Marketmen said increased selling by stockists in tandem with weak global cues mainly led to a fall in gold prices.

They said subdued demand at existing higher levels also influenced the gold prices.

Gold of 99.9 and 99.5 per cent purity fell further by Rs 160 each to Rs 19,140 and Rs 19,040 per ten grams, respectively. The metal had lost Rs 105 in the previous trading session.

However, sovereign continued to be asked around previous levels of Rs 15,000 per piece of eight grams in restricted buying at prevailing levels.

On the other hand, silver ready and weekly-based delivery remained in industrial and speculator’s demand and spurted by Rs 240 and Rs 380 to Rs 31,390 and Rs 31,400 per kg.

Silver coins remained steady at Rs 35,000 for buying and Rs 35,100 for selling of 100 pieces.
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The precious metal mirrored the gains in global markets, the trend setter on the domestic front, marketmen said. Gold rose to two-month high levels in the global markets following a fall in the dollar.

Gold prices spurted by Rs 215 to trade at a record high of Rs 19,405 per ten grams, surpassing the previous record level of Rs 19,220 set on June 8.

Silver ready recorded a handsome gain of Rs 525 to trade at Rs 30,950 per kg on increased offtake by industrial units and jewellery fabricators.

Marketmen said that a sharp rise in demand from jewellers and stockists to meet the ensuing festival season demand boosted the uptrend. The gold of 99.5 per cent purity shot up by Rs 215 to Rs 19,305 per ten grams. Sovereigns also rose by Rs 100 to all- time high of Rs 15,000 per piece of eight grams.

Silver ready gained Rs 525 to trade at Rs 30,950 per kg and weekly-based delivery spurted by Rs 625 to Rs 30,920 per kg. Silver coins were also gained Rs 200 to Rs 34,900 for buying and Rs 35,000 for selling of 100 pieces.
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The volatility index, called the India VIX, indicates the investor’s perception of market volatility in the near-term. It touched its lowest ever level of 15.28 in the early part of the session yesterday after opening at 17.09, but ended 14.86 per cent higher at 19.63.

The reading of 15.28 was the lowest ever on the India VIX since the barometer was launched by the National Stock Exchange on a real-time basis on July 19. In addition, yesterday’s jump of nearly 15 per cent was its steepest rise in a single day.

The index depicts the expected market volatility over the next 30 days, with the higher the India VIX value, the higher the expected volatility and vice-versa.

“There is a nervousness-like situation among investors and in that scenario, markets are likely to be highly volatile in the coming sessions,” Geojit BNP Paribas Research Head Alex Mathews said.

The index moves up when there is a fear among investors that the 50-share Nifty index will move down and the volatility index tends to move down when investors are confident that the market has the strength to trade upwards.

Analysts said the outlook for the equity market remains weak.

“Global markets are not stable nowadays and in such a scenario, local bourses are also expected to behave in the same fashion,” said an analyst.

On the global front, the Dow Jones moved below the psychological 10,000-level on the back of weak economic data which came out recently.

Investors were also jittery ahead of the GDP and consumer confidence numbers of the US which are expected to show that the US economy slowed in the second quarter.

In Asian markets, Japan’s consumer price fell for the 17th month and household spending rose less than forecast.

The NSE’s benchmark Nifty today plunged by 69.20 points, or 1.26 per cent, to settle at 5,408.70.
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“A slightly better than expected US GDP data and some inspiring talk by Ben Bernanke lifted the sagging spirits on Wall Street and elsewhere. Not surprisingly, Asian markets are all up smartly. News that Bank of Japan is holding an emergency meeting to check unbridled gains in the yen has also buoyed sentiment.

Given the positive backdrop, we are set for a gap-up opening. Some shorts may be covered as well. The big question is whether one should buy into this rally or sell? We would urge some caution as the global situation, especially in the US, looks precarious. At best what we will see is a relief rally. Things may soon turn choppy and range-bound.

A lot of uncertainty still prevails in global markets. Don’t get too inspired to jump the gun and take big directional calls. Keep reviewing your strategy each day as volatility is here to stay. Key events in the near term include Q1 GDP data (on Tuesday), auto sales, IIP, inflation and the RBI meeting,” said IIFL report.

Bombay Stock Exchange’s Sensex was at 18128.52, up 130.11 points or 0.72 per cent. The index touched a high of 18216.50 and low of 18063.48 in trade so far.

National Stock Exchange’s Nifty was at 5443.60, up 34.90 points or 0.65 per cent. The broader index touched intraday high of 5469 and low of 5408.90.

BSE Midcap Index was up 1.06 per cent and BSE Smallcap Index moved 1.23 per cent higher.

Amongst the sectoral indices, BSE Metal Index advanced 1.74 per cent, BSE Realty Index moved 1.35 per cent higher and BSE Auto Index gained 1.08 per cent.

Market breadth was positive on the BSE with 1787 advances against 438 declines.

Meanwhile, the Asian markets were in the positive terrain. Nikkei 225 was up 2.27 per cent, Shanghai Composite moved 1.45 per cent higher and Seoul Composite gained 1.52 per cent.
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Given the positive backdrop, we are set for a gap-up opening. Some shorts may be covered as well. The big question is whether one should buy into this rally or sell? We would urge some caution as the global situation, especially in the US, looks precarious. At best what we will see is a relief rally. Things may soon turn choppy and range-bound.

A lot of uncertainty still prevails in global markets. Don’t get too inspired to jump the gun and take big directional calls. Keep reviewing your strategy each day as volatility is here to stay. Key events in the near term include Q1 GDP data (on Tuesday), auto sales, IIP, inflation and the RBI meeting,” said IIFL report.

Bombay Stock Exchange’s Sensex was at 18128.52, up 130.11 points or 0.72 per cent. The index touched a high of 18216.50 and low of 18063.48 in trade so far.

National Stock Exchange’s Nifty was at 5443.60, up 34.90 points or 0.65 per cent. The broader index touched intraday high of 5469 and low of 5408.90.

BSE Midcap Index was up 1.06 per cent and BSE Smallcap Index moved 1.23 per cent higher.

Amongst the sectoral indices, BSE Metal Index advanced 1.74 per cent, BSE Realty Index moved 1.35 per cent higher and BSE Auto Index gained 1.08 per cent.

Market breadth was positive on the BSE with 1787 advances against 438 declines.

Meanwhile, the Asian markets were in the positive terrain. Nikkei 225 was up 2.27 per cent, Shanghai Composite moved 1.45 per cent higher and Seoul Composite gained 1.52 per cent.
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“In line with flattish global markets, today we may also see flat opening. Nifty has support around 5450 levels and sustaining below these levels may witness selling pressure towards 5400 levels. On upside if it sustains above 5480 levels then we may see buying interest emerging towards 5500-5520 levels,” said brokerage Anand Rathi.

Nifty was at 5477.20, higher by 14.85 points or 0.27 per cent. The National Stock Exchange benchmark opened at 5462.10 versus the previous close of 5462.35. The 50-share index saw a high of 5482.15.

Sensex was up 44.93 points or 0.25 per cent at 18,224.57. The Bombay Stock Exchange sensitive index opened at 18,194.78 against Wednesday’s close of 18,179.64. The 30-share index touched a high of 18,248.22.

“Nifty is continuously witnessing selling pressure at higher levels and participants are keeping cautious approach. Nifty futures rollover on the third day of expiry was 59 per cent, which is in line with last few months expiry. Market is likely to remain highly volatile ahead of August month F&O expiry,” the brokerage added.
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The Sensex, which had gained 405 points in the last two trading sessions, fell by 53.12 points, or 0.29 per cent, to 18,401.82 on emergence of profit-booking, with FMCG, IT and banking stocks the worst-hit.

The National Stock Exchange index Nifty fell by 9.55 points, or 0.17 per cent, to 5,530.65. During the day, it touched a high of 5,546.60 points.

However, gains registered by market heavyweight Reliance Industries and leading engineering firm Larsen & Toubro cushioned the market from a severe fall. L&T rose by 2.81 per cent, while Reliance Industries ended 1.16 per cent higher.

Realty shares also gained on easing fears about aggressive monetary tightening by the central bank in view of a fall in inflation, with DLF shooting up by 3.55 per cent.

The FMCG sector index suffered the most, losing 1.02 per cent to 3,375.08, followed by the IT sector index, which declined by 0.94 per cent to 5,517.00.

Analysts said IT stocks were badly affected a sharp fall in US markets as disappointing unemployment and industrial data rekindled worries about the economic recovery in the world’s largest economy.

In yesterday’s session, the Dow Jones Industrial Average plunged 144.33 points, or 1.39 per cent, and the Nasdaq composite index declined 36.75 points, or 1.66 per cent.

IT companies depend on US and European markets for 50 per cent of their revenue and the negative trend overseas saw the second most valued scrip on the Sensex, Infosys Technologies, drop by Rs 29.30 to Rs 2,769.20, while Tata Consultancy Services lost Rs 7.40 to Rs 867.10 and Wipro fell by Rs 10.75 to Rs 411.65.

Marketmen also said banking shares, which have been performing well in the past few sessions, fell after the Credit Suisse Group said they are “expensive”.

The banking sector index fell by 0.79 per cent to 12,527.49 as State Bank of India, ICICI Bank, HDFC Bank fell sharply, eroding recent gains. SBI fell by Rs 22.05 to Rs 2,783.65, while ICICI Bank lost Rs 18.05 to Rs 994.50 and HDFC Bank dropped by Rs 0.15 to Rs 2,231.

Among the 30-BSE index components, 21 stocks ended with losses, while nine closed in positive terrain.

Asian markets ended lower, with key benchmark indices in Japan, South Korea, Singapore, Hong Kong, Taiwan and China finishing lower by 0.02 per cent to 1.96 per cent. Key benchmark indices in France, UK and Germany also eased by 0.38 pct to 0.50 pct.
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Financials were among the top gainers on the back of rising inflows from foreign institutional investors (FIIs) who have been lured by 8.5% economic growth forecast this year while the developed world struggles to keep a recovery on track.

Consumer spending in Asia is likely to reach $32 trillion by 2030, powered by the emergence of a rising middle class in the fast-growing economies of China and India, the Asian Development Bank said in a report released on Thursday. However, with some blue-chip stocks hitting record highs there are concerns the market could be becoming expensive and foreigners may look elsewhere to buy relatively cheaper stocks.

said Gajendra Nagpal, CEO of Unicon Financial. “Interest of FIIs is there but domestic money is eluding us.” The 30-share BSE index closed up 1.08%, or 197.82 points, at 18454.94, with 17 of its components advancing. Winners overwhelmed losers in the ratio of 1.3:1 in the broader market on relatively better volume of 470 million shares.

The benchmark index hit 18475.27 during trade, its highest since February 2008 and is up 5.7% in the year to date, outpacing broader indexes such as the MSCI’s measure of Asian shares ex-Japan, emerging markets index and MSCI’s world stocks index.

Foreign funds have poured $11.8 billion into Indian equities so far this year. In 2009, record inflows of $17.5 billion had lifted the BSE Sensex 81%. Second-largest private lender HDFC Bank rose as much as 2.4% to an all-time high of `2,240. Bigger rival ICICI Bank climbed as much as 4.6% to `1,015, its highest in 29 months. Mortgage lender Housing Development Finance Corp rallied as much as 4.4% to `648.5, its highest since January 2008. Top lender SBI bucked the trend and shed 0.3%.

Energy major Reliance Industries, which has the highest weightage on the BSE index, firmed 1.3%, catching up with the broader market rally after recent underperformance. The stock is still down more than 10% so far in 2010.
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Nifty was ruling at 5452.95, up 0.85 points or 0.02 per cent. The National Stock Exchange benchmark opened the week flat at 5452.10. The 50-share index saw a high of 5464.55 versus a low of 5446.30 in the early minutes.

Sensex was up 8.30 points or 0.05 per cent at 18,175.33. The Bombay Stock Exchange sensitive index started the session at 18,169.80 against Friday’s close of 18,167.03. The 30-share index moved between 18,200.62 and 18,093.71.

“In line with mixed global markets, today we may also see flat opening. Nifty has minor support around 5420 levels and sustaining below these levels may witness selling pressure towards 5380 levels. On upside 5480 levels would work as a resistance area and if it sustains above these levels then we may see up move towards 5500-5500 levels led by short covering,” said brokerage Anand Rathi in its very short-term view.
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