Markets likely to get a good start on supportive global cues

The Indian markets took a pause in last session after a big rally; traders opted to book profit under the sluggish global cues, there was only individual stocks movement that kept the markets ticking. Today, the markets are likely to get a gap-up start on supportive global cues. Power sector stocks are likely to show some upmove after a high powered delegation comprising top corporate leaders of the power industry met Prime Minister yesterday, it is being said that PM has given full assurance to address all their issues in a credible and commercially sustainable way, pledging a practical, pragmatic and viable solution to the industry's problems. The cable stocks are once again likely to be in limelight as Reliance Strategic Investments, a subsidiary of Reliance Industries, has bought over one percent stake in DEN Networks, one of the two listed cable distribution companies in India. The traders will also be eyeing the movement of rupee which has been strengthening for last couple of days on foreign fund inflows.

Apart from this, there will be lots of important result announcements’, Bajaj Auto, HDFC Bank, HeroMotoCorp, IFCI, Mastek, Bajaj Holdings and Dish TV India will be the prominent to announce their numbers today.

The US markets surged on Wednesday on getting some better than expected earnings announcement, surge in homebuilders sentiments and positive signal from IMF that the international organization is seeking to boost its war chest by $600 billion to help countries reeling from the crisis. The Asian markets have made a good start with all the major indices moving higher by over a percent in early trade. Chinese market was up with report that China’s central bank is allowing a limited increase in first-quarter lending by the five biggest banks and the nation’s banking regulator is weighing a plan to relax capital requirements; however there was reports that developers slowed home sales toward the end of 2011.

Back home, a session after showcasing a smart rally of around two percent, Indian benchmark equity indices went on to consolidate the gains in Wednesday’s session by settling just below the neutral line with marginal cuts. It turned out to be a range bound session for the frontline indices which somehow managed to cling on to the psychological 4,950 (Nifty) and 16,450 (Sensex) levels as investors indulged in stock specific activity. Investors resorted to largely across the board position squaring a day after witnessing sharp rally. IT bellwether TCS got punished in the session despite announcing quarterly earnings that were better than street expectations amid speculations that slowdown in major importing regions like Europe and the US will impact future earnings. However, the reports of index heavyweight Reliance Industries mulling over share buy-back underpinned the stock by close to five percent, giving the much needed support and preventing the downside for the benchmarks. Meanwhile, shares of aviation companies like Jet Airways, Kingfisher and SpiceJet flied higher after the government opined that it was considering allowing foreign carriers to take 49 percent stake in Indian airlines. Also the stocks of power sector companies remained in limelight in the session as a high level delegation consisting of top corporate leaders of the power industry like Ratan Tata, Anil Ambani, were scheduled to meet Prime Minister to discuss a host of issues concerning the power sector. Leads from the Asian peers too remained unexciting as most markets in the region sank into the negative terrain by the end. Earlier on Dalal Street, the benchmark got off to a positive opening tracking the largely positive Asian markets as the encouraging economic reports from Germany and the US added to the hopes that global economic growth prospects are not as gloomy as feared. After some hiccups in initial hour of trade, the frontline indices gained some momentum and touched the session’s high in late morning hours but remained in a narrow range through the day’s trade. Though, some selling pressure surfaced after weak European opening which prevented the key gauges from climbing back into the positive terrain by the end. Eventually, the indices failed to extend the three straight session gaining momentum but managed to hold on to crucial levels. On the BSE sectoral space, the Oil & Gas counter remained the gainer in the space with strong gains of over three percent while the high beta Realty sector was the only other gainer in the space which ended with over half a percent gains. On the flipside, the Metal counter remained the top laggard with over two percent losses followed by the IT index which too plunged with similar losses. Finally, the BSE Sensex lost 14.58 points or 0.09% to settle at 16,451.47, while the S&P CNX Nifty declined by 11.50 points or 0.23% to close at 4,955.80.

The US markets surged on Wednesday, to six-month highs sending the S&P 500 Index to a close above 1,300 for the first time since July 28, as investors welcomed the International Monetary Fund plan to boost its bailout fund to contain Europe's debt crisis. The sentiments also got a lift as investors welcomed other signs of improving global economic growth like upbeat report on the housing market and Goldman Sachs earnings which lifted the markets further. The National Association of Home Builders Housing Market Index jumped to a four-year high of 25 in January, from a reading of 21 the month before. The index, which measures homebuilders' confidence, has been trending higher for the past four months. Also, Goldman Sachs shares jumped after the investment bank reported results that beat Wall Street’s expectations. Separately, figures from the Federal Reserve had US industrial production rebounding last month, climbing 0.4% after a revised 0.3% drop in November.

In Europe, the IMF stated that it is looking to raise up to $500 billion in additional lending resources, including a $200 billion commitment that euro area governments announced last year. The new target is based on the IMF's estimate of $1 trillion in potential global financing needs in the coming years. However, Greek government officials and the group representing private sector investors and banks resumed talks yesterday, trying to nail down how big write-down private investors are willing to take on the country's bonds. The talks ended without an agreement, but will resume on Thursday.

The Dow Jones Industrial Average closed higher by 96.88 points, or 0.78 percent, at 12,579.00. The S&P 500 was up by 14.37 points, or 1.11 percent, at 1,308.04, while the Nasdaq closed up 41.63 points, or 1.53 percent, at 2,769.71.

Crude oil prices consolidated their position around previous closing levels on Wednesday and settled only with slight losses after International Energy Agency forecasts showed that mild weather conditions this winter and a rising likelihood of a sharp economic slowdown could dent global oil demand growth in 2012. Also growing uncertainties surrounding the Euro-zone dissuaded investors from building positions in the commodity while, the continued depreciation in US dollar prevented downside in the fuel prices.

Meanwhile, worries over supply disruptions too grew amid tensions between Iran and Saudi Arabia.In addition, France’s move to accelerate the EU's implementation of an embargo on Iranian oil export also did its bit in supporting crude prices.

Benchmark crude for February delivery eased $0.12 or 0.1% to $100.59 a barrel, after trading as high as $100.98 and as low as $99.84 a barrel on the New York Mercantile Exchange. In London, February Brent crude declined $0.87 or 0.8% to end at $110.66 a barrel.