Today's cues: Europe sours, commodities crash

Moneycontrol Bureau

A rise in Italy's borrowing costs to record levels sent the S&P 500 lower for a third session, closing more than 1% down in the red. The Dow and Nasdaq too lost about a percent and half. This follows a completely battered European market.
European equities slid nearly 3% yesterday as the euro dropped to an 11-month low of 1.29 against the dollar after a grim Italian bond auction. The auction of the five-year Italian treasuries saw yields jump to 6.47%, the highest since the euro was created.
The sky gets even cloudier over Europe. There are reports that Fitch has downgraded five major financial institutions in the eurozone including Credit Agricole.
Back home, the BSE Sensex, fell below the psychological 16,000 mark and the NSE Nifty ended marginally down at 4718 after a volatile session. November inflation figures came in at 9.11% against 9.73% the previous month. Click on the 'speaker icon' on the top-right to listen to the pre-market summary and newsmakers of the day.
Asian markets have today opened in the red, the Kospi, HangSeng, Nikkei all down 1.2-1.5%. This could possibly be on account of the PMI numbers to be released out of China which the street expects weak.
In the currency space, the dollar index is currently at 80.52 and the yen is below the 78 clocked intraday yesterday.
Commodities have crashed 4-5% across the board. Gold dropped through the $1,600 level for the first time in almost three months and Crude index plunged under 95 dollars a barrel while Brent lost 4.2% as OPEC warned of declining global growth next year and Iran denied reports that it will hold war games in a key oil-shipping lane.
The market focus for today is likely to be on the Chinese PMI data, Spanish bond sale, US jobless claims and US industrial production numbers.
Moving on to the newsmakers of the day,
The biggest news of yesterday apart from inflation was a report in Financial Times that claimed that two UBS bankers created Pleuri in Mauritius to allow Anil Ambani to illegally invest in Indian stocks. This evidence, they claim, was presented by the Financial Service Authority (FSA), the UK market and financial services regulator, before a London tribunal. Under Indian law, Indian nationals cannot invest in stocks through overseas subsidiaries. Watch out for moves in the ADAG group stocks today.
The prime minister yesterday indicated that FDI in retail may be possible after March. That could lift some spirits in the sector now.
The Government yesterday introduced the new Companies Bill, retaining certain provisions like 2% yearly spend on CSR activities and a fixed-term for independent directors.
The promoters of JSW Steel are set to loose the up front initial payment of Rs 529 crore paid for preferential warrants. This is as they will not be converting their warrants owing to price erosion and have decided not to pay the remaining Rs 1,588 crore. SBI chairman says that cash infusion to the tune of Rs 3000-4000 crore is around the corner for the bank. But the form of govt fund infusion has not yet been decided. DLF is all set to ink a Rs 900 crore Pune SEZ deal with Blackstone.
Some bad news for the telecom pack. The Telecom Regulatory Authority of India (TRAI) has initiated legal action against cellular operators for not implementing Mobile Number Portability (MNP) properly. While proceedings have begun against Bharti Airtel, show-cause notices have been issued to others, including Vodafone and Idea Cellular. Padma Venkatraman
padma.venkatraman@network18online.com