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Indian stocks to open range-bound: Friday Market Preview

While US stocks gained on Thursday, concerns about growth still remain keeping investors on the sidelines

The local market is expected to open range-bound on the back of mixed cues from Asia. Wall Street closed higher overnight, halting a six-day losing streak as investors lapped up stocks at lower prices and good economic data. Asian markets were mixed in early trade on Friday as investors await the Chinese trade data. The SGX Nifty, which was in the green in early trade, was four points lower at 5,518 over its Thursday’s close of 5,522.

Back home, industrial output numbers for April will be announced today. Analysts estimate the growth at 5.1%, lower than 7.3% recorded in March. The Central Statistical Organisation (CSO) is set to unveil a new set of index with 2004-05 as the base year and more items. The CSO will release the IIP (Index of Industrial Production) with the new base year as well as the old base year, which will continue for three months.

Yesterday the market opened flat ahead of the weekly food inflation figures, with the Sensex just one point over its previous close of 18,395 while the Nifty shed three points to resume trade at 5,524. Concerns about the slowdown across the world also kept investors guarded. The Sensex touched its intra-day high in the first hour of trade at 18,450 and the Nifty climbed to 5,540 in noon trade.

The gauges were range-bound, when the announcement of a nearly one percentage point hike in food inflation numbers put some pressure on the market, pushing the indices to intra-day lows in noon trade. At the day's low the Sensex was down 67 points at 18,327 and the Nifty had lost 25 points to 5,502.

Subsequently, some buying in select stocks along with a positive opening on key European bourses enabled the domestic indices inch into the green, even as volatility continued through the session. The market closed near the opening levels with the Sensex shedding nine points to 18,385 and the Nifty losing six points at 5,521.

The Nifty was not able to touch the first resistance of 5,550, signalling a pause in the uptrend. However, we can still expect the current upmove to continue if the Nifty can manage to stay above 5,480.

Markets in the US witnessed a rebound in Thursday’s trade on positive economic news, ending a six-day slide. However, analysts opine that the gains will be short-lived. The US deficit declined 6.7% to $43.68 billion in April, its lowest level of the year, as exports touched a new high and purchases of oil fell sharply on a surge in prices.

A separate report showed that consumer confidence rose last week for the third consecutive time. The Bloomberg Consumer Comfort Index climbed to minus 45.9 in the period to June 5, the best showing since the end of April, from the prior week’s minus 47.1. On the other hand, initial claims for state jobless benefits increased to 427,000 last week, contrary to economists’ expectations for a fall to 415,000.

Banks witnessed the biggest gains with Wells Fargo & Co surging 3.4%, JP Morgan Chase & Co rose 1.5% and Goldman Sachs Group Inc added 1.5%.

The Dow gained 75.42 points (0.63%) to close at 12,124.36. The S&P 500 rose 9.44 points (0.74%) at 1,289.00 and the Nasdaq was up 9.49 points (0.35%) at 2,684.87.

Brent crude rose 1.5% on Thursday, touching a five-week high on OPEC’s failure to reach a deal on raising output. ICE Brent for July delivery settled at $119.57, gaining $1.72, the highest close since 4th May. US crude closed at $101.93, up $1.19, or 1.2%, highest since the end of May.

Markets in Asia were mixed on the last trading day of the week on a slew of economic data across the region. Japanese wholesale prices rose in May at a slower annual rate than the previous month on the back of a pause in commodity price rally. South Korea’s central bank on Friday raised its policy rate by a quarter percentage point after holding it steady for the past two months. Investors will closely watch China’s trade data to see how the world's second-largest economy is holding up amid government credit curbs and power shortages.

The Jakarta Composite gained 0.23%, the KLSE Composite rose 0.33%, the Nikkei 225 surged 1.25% and the Straits Times added 0.02%. On the other hand, the Shanghai Composite was 0.14% lower, the Hang Seng fell 0.45%, the Seoul Composite declined 0.55% and the Taiwan Weighted was down 0.59%.

Back home, the high-level committee constituted by finance minister Pranab Mukherjee, in its first meeting held yesterday, decided to seek public comments on ways to unearth black money. The committee, headed by CBDT chairman Prakash Chandra, was set up last month to examine ways to strengthen laws to curb generation of black money in India, its illegal transfer abroad and its recovery.

The meeting was held in the backdrop of the government facing flak from civil society and opposition for not doing enough to deal with the menace of black money.

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