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Indices may extend the gaining streak with a positive start

23 Dec 2011 Evaluate

The Indian markets once again surprised the marketmen and took a u-turn in final hours to close higher for the second straight day on Thursday. Traders went for value picking at lower levels and rate sensitives’ rejoiced with the weekly food inflation declining to near a four year low. Today, the start is likely to be flat-to-positive and in early trades indices might extend their gains supported by the positive global cues. Global rating agency ‘Fitch’ has said that Indian economic growth will rebound to 7.5 per cent in FY-13 from 7 per cent in FY12. Fitch Ratings in its '2012 Outlook: Indian Sub nationals' has said that the Indian economy is expected to perform better than the developed economies. Rate sensitives’ and the beaten down technology stocks too may see some recovery. Meanwhile, the Reserve Bank of India has expressed its concern over bad loan growth in Indian banks, which has spiked up over thrice the average growth in the preceding five years. The stress test results of the apex bank shows that bad loans will reduce bank profits and may also force some of them to raise capital. Besides rising bad loans, the financial system could come under stress because of a falling rupee and fleeing foreign investors. That may put some pressure on the banks. Also the telecom stocks are likely to be in somber mood as the telecoms ministry is likely to tell carriers they won't be allowed to offer 3G services outside their licensed zones through roaming agreements with each other.

The US markets after a day of consolidation, once again made a good closing and all the major indices gained by over half a percent buoyed by the good weekly jobless claims that dropped to their lowest level since April, providing hopes the job market is improving. However, the government lowered its estimate of US economic growth in the July-September quarter to an annual rate of 1.8 percent from 2 percent. The Asian markets have mostly made a positive start, though some of the indices are not trading but others are up on signs of a recovery in the US economy and easing concern over stability in North Korea.

Back home, a session after staging a marvelous performance, Indian benchmark indices managed to pull through yet another strong rally on Thursday, thanks to the hefty short covering in the beaten down rate sensitive counters that prevailed for second straight session. The psychological 4,650 and 15,500 levels proved as strong supports for the benchmarks as they bounced over two percentage points from around those levels after investors hunted for badly beaten down but fundamentally strong bargains on getting encouraging domestic economic report and on optimism in European markets. Market participants rejoiced as government released weekly inflation data which showed that India’s food inflation plunged to a near four-year low to 1.81% for the week ended December 10 from 4.35% in the previous week. On the global front, most markets in the Asian region exhibited pessimistic performance however, the European markets bucked the trend and rose, buttressing domestic sentiments. Meanwhile, sugar stocks including Shri Renuka Sugars and Bajaj Hindustan surged higher in the session after Food Minister said that the government is contemplating demands for partial decontrol of the sector .While software and technology counters bucked the optimistic trend after dismal results from Oracle Corp, the world's No.3 software maker raised concerns over the prospects of domestic companies too. Earlier on Dalal Street, the benchmark got off to a somber opening following unsupportive leads from Asian markets as worries over Euro-zone’s sovereign debt woes once again coming to the fore. The frontline indices kept oscillating in a narrow range through the morning trades. The key gauges hit intraday lows in early afternoon trades after which the indices witnessed sudden spurt in sentiments which helped them to capitalize on the impetus and settle around the highest point of the day, extending the gaining streak for a second straight day. On the BSE sectoral space, the beaten down rate sensitive Realty counter remained the top mover in the space with close to three percent gains while the Bankex pocket too made its presence felt by surging over two percent. On the flipside, the IT and TECk counters remained the only chinks in the armor and settled with over a percent losses each. Finally, the BSE Sensex garnered 128.15 points or 0.82% to settle at 15,813.36, while the S&P CNX Nifty amassed by 40.70 points or 0.87% to close 4,733.85.

The US markets climbed on Thursday, with the S&P 500 extending gains into a third day, after American jobless claims and consumer confidence were reported better than expected. The government’s count of first-time filings for unemployment benefits last week declined to 364,000, the lowest level since April 2008 which lifted hopes that the jobs market may be in a slow recovery. The report showed that initial jobless claims fell 4,000 to 364,000 from the previous week's revised figure of 368,000. And, the Conference Board’s index of leading economic indicators rose 0.5% in November after a 0.9% rise the month before. Separately, the Thomson Reuters/University of Michigan’s final reading of consumer sentiment rose to 69.9 in December from 64.1 at the end of last month.

However, the third estimate of the US gross domestic product was revised lower to 1.8% for July-September quarter from the second estimate of 2% and first estimate of 2.5%. Weak exports and rising imports and higher commodities prices subtracted from the growth. In Europe, Standard & Poor's downgraded Hungary’s sovereign credit rating to junk status with a negative outlook, citing unpredictable policy framework that is harming the economy's medium-term growth prospects.

The Dow Jones industrial average gained 61.91 points, or 0.51 percent, to 12,169.70. The Standard and Poor’s 500 closed higher by 10.28 points, or 0.83 percent, to 1,254.00, while the Nasdaq composite gained 21.48 points, or 0.83 percent, to 2,599.45.

Crude prices climbed higher for the fourth session in row as investors piled up hefty positions in the commodity amid increasing fears of supply disruptions from Iraq and Iran. Escalating geopolitical turbulence in Iraq’s capital Baghdad where bombings killed at least 57 and speculations of further sanctions against Iran raised fears of oil supply disruption. The oil prices also got a boost with a slew of encouraging US economic reports including the initial jobless claims numbers which decreased to a three-year low, indicating that the world’s largest economy is strengthening.

Benchmark crude for February delivery climbed $0.86, or 0.87% to settle at $99.53 a barrel, after trading as high as $99.23 on the New York Mercantile Exchange. In London, February Brent crude gained $0.18, or 0.15%, at $107.89 a barrel on the ICE.

SEBI Registered: Investment Adviser - INA000013323

Name of the IA registered with SEBI:	The Alchemists Ark Pvt. Ltd.
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SEBI Registration Number:	INA000013323 Validity - May 16, 2019 - Perpetual
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Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.

Compliance Officer:

Name: Shrikant Jagtap

Email: shrikant.jagtap@moneyworks4me.com

Mobile No: +91 97638 00745

Grievance Officer:

Name: Mukta Vaze

Email: mukta.vaze@moneyworks4me.com

Mobile No:+91 98609 19463

Principal Officer:

Name: Atharva Bhide

Email: atharva.bhide@moneyworks4me.com

Mobile No:+91 91758 99463

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Plot No. C 4-A , G Block, Near Bank of India, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra 400051

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