Markets to get a cautious start; Infosys numbers to give direction

The Indian markets after a rangebound trade snapped the previous session with marginal gains, there was surge in realty stocks that kept the markets above the neutral line. Today, is the big trading day for the Indian markets as IT bellwether Infosys will be announcing its Q3 numbers along with other heavy weight HDFC. The street is expecting a rise in the net profit of Infosys in rupee terms; however economic crisis in developed countries will remain a concern. The stock has fallen over a percent in last session and traders will be eyeing the management's comments on the business prospects and indications of revision in revenue guidance. The market will also be looking at the weekly inflation numbers and the monthly IIP data. The industrial output after falling drastically in previous month is likely to bounce back in green as indicated by lead indicators. Core or infrastructure index, a part of index of industrial production (IIP) rebounded in November with a 6.8% growth compared to 0.1% in October and 3.7% in November 2010.While, the widely tracked HSBC Purchasing Managers’ Index (PMI) rose to 54.2 points in December, the fastest in a month since April 2009.

There will be other many scrip specific actions to keep the markets buzzing. Gruh Finance, DCB, KSL Industries and TTK Prestige will be among the many to announce their numbers today. Infosys has reported a huge 30.8% jump in Y-o-Y revenue and 33.3% in net profit in rupee term and has guided EPS growth of 32.4% in next quarter and 23.2% rise in full year.

The US markets made a flat closing on Wednesday losing all their early gains on European economy worries after European Union cut its estimate of economic growth to its slowest pace in more than two years. However, on the domestic front Federal Reserve said the final weeks of 2011 were the economy's strongest since it appeared to be slipping toward recession in late spring. The Asian markets have made a mixed start, though most of them are in green but the Japanese market has declined on reports of weaker export, on the same time the Chinese market has improved on slower inflation.

Back home, Indian benchmark equity indices, after vehemently surging over two percent in the previous session, went on to consolidate the gains in Wednesday’s session by settling just above the neutral line. It turned out to be a range bound session for the frontline indices which somehow managed to cling on to the levels reached on Tuesday as investors at large chose to play the waiting game a day ahead of a series of developments both from the domestic as well as global front which will pave the way forward for the local bourses. Market participants chose to remain on the sidelines ahead of the release of industrial production (IIP) data for November, amid speculations that IIP might bounce back into the positive terrain at an annual rate of 2.2 percent a month after plunging to -5.1%, the lowest levels in 28 months. Investors also remained cautious ahead of the quarterly earnings season which will formally commence after bellwether Infosys’ result announcement on January 12, 2012, while one of India’s leading lenders HDFC too is going to announce result for third quarter of FY 2011-12. However, the upside for local markets was limited as leads from Asian space remained mixed while some caution prevailed in the European markets. Earlier on Dalal Street, the benchmark got off to a flat opening, following cautious sentiments prevailing in Asian markets. The frontline indices gathered some momentum and touched intraday highs in early afternoon trades but remained in a narrow range through the day’s trade. Though some selling pressure surfaced after weak European opening post which the indices slipped into the negative territory but some recovery in the last leg of trade ensured that the key indices end second straight session in the green zone. On the BSE sectoral space, the high beta Realty counter once again remained the top gainer in the space with over four and half a percent gains while the beaten down Metal counter too shone brightly with over two percent gains. On the flipside information technology counter remained under moderate pressure as the rupee strengthened to one month highs in the previous session while investors also were cautious ahead of bellwether Infosys’ result announcement. Finally, the BSE Sensex gained 10.77 points or 0.07% to settle at 16,175.86, while the S&P CNX Nifty rose by 11.40 points or 0.24% to close at 4,860.95.

The US markets closed mixed on Wednesday, with the S&P 500 Index stalling at five-month highs, on the ongoing tug between Europe’s debt troubles spurred by growing signs that it may slip into a recession and an improving US economy. The market showed no perceptible reaction to the afternoon release of the Federal Reserve’s Beige Book, which found US economic activity to be expanding at a modest to moderate pace. The Beige Book survey of business contacts in the Fed's 12 districts stated economic activity increased at a modest to moderate pace. This rate is an improvement from the mid-November report which stated that some districts were growing at a slow pace. This report will give Fed officials a feel for conditions on the ground as they prepare for their next monthly policy meeting on January 24-25.

In Europe, yesterday’s data from Germany’s Federal Statistics Office found that the nation’s economy probably contracted by 0.25% in the final quarter of 2011, a year that overall had Germany’s economy growing by a robust 3%. Besides, Gross domestic product in the 17-nation euro region will shrink 0.2 percent in the three months through March, following a contraction of 0.3 percent in the fourth quarter of last year, research institutes Ifo, Insee and Istat forecast in a joint report. Growth will stagnate in the second quarter, the institutes forecast and a recession typically is defined as two consecutive quarters of declining GDP.

The Dow Jones Industrial Average closed lower by 13.02 points, or 0.10 percent, at 12,449.50. The S&P 500 was up by 0.40 points, or 0.03 percent, at 1,292.48, while the Nasdaq closed up 8.26 points, or 0.31 percent, at 2,710.76.

Crude oil prices retreated over a percent to resume the downtrend on Wednesday, as investors chose to take profits off the table which brought the commodity prices at the lowest level so far in 2012. Sentiments got dampened after getting the disappointing weekly US oil stockpiles data which showed fuel inventories surged 5 million barrels last week, higher than the expected 1.1 million barrel rise, signaling steep decline in US oil demand. The oil prices were also pressured by the strength in US dollar which made the commodity more expensive for overseas investors.

However, crude got support around the psychological $100 a barrel mark as concerns over supply disruptions from Iran and Nigeria prevented further downside. Nervousness resurfaced as on one hand an Iranian nuclear scientist was killed in a Tehran car bombing while on the other the Nigerian government unexpectedly abandoned a $7 billion fuel subsidies program which may lead to shut down of facilities in a growing national strike.

Benchmark crude for February delivery plunged $1.37, or 1.3% to settle at $100.87 a barrel after trading as low as $100.55 a barrel on the New York Mercantile Exchange. In London, February Brent crude sank $1.04 or 0.9% to end at $112.24 a barrel on the ICE.