Market Analysis for Dec 12, 2011

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Market Analysis for Dec 12, 2011
The key domestic indices are likely to open on positive note, as the major Asian indices were seen trading in positive terrain tracking the positive closing on US front. Asian indices were seen wiping off their two days loss after U.S. consumer confidence topped estimates and European leaders agreed tighter budget rules and expanded a bailout fund.

The MSCI Asia Pacific Index advanced by 1 per cent to 116.19 as of 10:03 a.m. in Tokyo. Among the major indices, Hang Seng increased by 1.57 per cent at 18,877.36 the Straits times advanced by 0.93 per cent at 2,719.70 and the Nikkei 225 increased by 1.59 per cent at 8,671.65.

The negative closing of the US markets on Thursday weighed on domestic sentiment during morning trade. On Thursday, the Dow Jones Industrial lost 198.67 points and closed at 11997.7. The S&P500 lost 26.66 points and closed at 1234.35 and the Nasdaq closed at 2596.38, losing 52.83 points over the previous day"s closing.

Soon after witnessing a gap down opening, the benchmarks continued to trade below the baseline amid weak cues from the Asian markets. Asian markets fell on Friday as investors remained cautious ahead of the outcome of the crucial EU summit on Friday to discuss measures to contain the lingering debt contagion. Sentiment weakened after the European Central Bank indicated that it would not increase its purchases of Eurozone government bonds to contain the lingering crises, even as the central bank cut its key benchmark rate by 25 basis points to 1 per cent on Thursday.

Sentiment also weakened after a report said that China"s industrial output expanded at the slowest pace since August 2009 in November 2011 as demand weakened, a sign that economic growth is slowing in the world"s second largest economy. The domestic benchmarks continued to trade range bound in the negative terrain before falling to the day"s low during afternoon trade as sentiment remained subdued amid weak global cues.

The benchmarks pared off some of its losses in the final couple of hours of the session amid a slight recovery in the European stock markets. The announcement by the EU leaders to establish a new fiscal pact that would lay down tougher fiscal rules for the region"s governments and ensure budgetary discipline lifted sentiment across some European markets.

The EU leaders agreed to make available 200 billion euro to the International Monetary Fund and cap the permanent Eurozone bailout fund at 500 billion euro .However, the leaders failed to agree on an EU treaty change amid strong opposition from the UK.

Finally, the domestic benchmarks closed on a negative note, with the Sensex and Nifty shedding over 1.55 per cent each. Among the BSE Sectoral indices, BSE Capital Goods and BSE Auto fell by 2.58 per cent and 2.26 per cent, respectively.

On Friday, BSE SENSEX closed at 16213.46 down by 274.78 points or by 1.67 per cent and then NSE Nifty ended at 4866.7 down by 76.95 points or by 1.56 per cent. The BSE MIDCAP closed at 5620.85 down by 48.85 points or by 0.86 per cent, while the BSE SMLCAP ended at 6053.51 down by 54.49 points or by 0.89 per cent. The BSE Sensex touched intraday high of 16382.57 and intraday low of 16142.32 The NSE Nifty touched intraday high of 4918.35 and intraday low of 4841.75.

On Friday, US market closed on positive note amid the positive news from European front that eurozone officials agreed to tighter fiscal controls and also to make funds available to the International Monetary Fund for use in the rapid deployment of the European Financial Stability Facility.

Further the sharp decline in inflation in China and improved Consumer Sentiment Survey for December from the University of Michigan to 67.7 also coupled with the improvement in Eurozone and led the stocks to close on positive note. However the buying is not broad based but enough to support the bourses, as industrials advanced by 2.2 per cent on the back of General Electric (GE 16.84, +0.53). GE has announced the dividend increase that many took as a sign of confidence in cash flow.

In the major indices, the Dow Jones Industrial Average (DJIA) closed with a gain of 186.56 or 1.55 per cent at 12,184.26 while NASDAQ index finished up by 50.47 points or 1.94 per cent to 2,646.85. The S&P 500 (SPX) closed higher by 20.84 points or 1.69 per cent to 1,255.18.

Crude oil futures prices closed with the gain of 1.1 per cent to USD 99.41 per barrel and gold posted the gain of 2.4 per cent and closed at USD 1,717.40 per ounce.

The FIIs on Friday stood as net buyer in equity as well as in debt. Gross equity purchased stood at Rs. 2,209.60 crore and gross debt purchased stood at Rs. 3,189.90 crore, while the gross equity sold stood at Rs. 2,014.00 crore and gross debt sold stood at Rs. 1,747.60 crore. Therefore, the net investment of equity and debt reported were Rs 195.60 crore and Rs 1,442.40crore, respectively.

On BSE, total number of shares traded was 18.24 crore and total turnover stood at Rs 1,897.66 crore. On NSE, total number of shares traded was 5916.9 lakhs shares and total turnover stood at Rs 9952.24 crore.

In the NSE Futures and Options segment, total number of contracts traded in index futures was 775461 with a total turnover of Rs 17520.04 crore. Along with this total number of contracts traded in stock futures were 524882 with a total turnover of Rs 11975.29 crore. Total numbers of contracts for index options were 4278826 with a total turnover of Rs 106442.62 crore and total number of contracts for stock options was 164281 with a total turnover of Rs 3809.95 crore.

Dion Global Solutions Ltd

Read more about: bse, nse, futures, government, euro zone
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