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Caution Rules

Caution Rules

Yesterday, it was a relief to see the Sensex close higher than 10000 and the Nifty above 3000. It was a great start to November. But can the bulls sustain the current tempo? How long will this recent spurt last? There is also a question mark over the sustainability of the recent FII buying.

European shares rose for a fifth consecutive session, as investors continued to welcome central banks' efforts to shore up sentiment.

But U.S. stocks closed nearly flat yesterday. Automakers reported dismal monthly sales and a report showed that U.S. manufacturing activity dropped sharply in October. Investors were also cautious as the race for the White House neared the finish line. Yesterday, Dallas Federal Reserve Bank President Richard Fisher forecasted that there would be no economic growth through 2009. The government also said it would borrow $550bn in the fourth quarter and another $368bn in the first quarter of next year as it looks to fund the massive financial rescue plans recently put in place.

The dollar fell against the euro and gained against the yen. COMEX gold for January delivery climbed $8.60 to settle at $727.50 an ounce. U.S. light crude oil for December delivery fell $3.90 to settle at $63.91 a barrel on the New York Mercantile Exchange.

The Nikkei is up today but most other Asian markets are down.