Indian markets to get slight recovery in early trade after a sharp cut

The Indian markets suffered sharp correction and the benchmark indices lost over two percent in the last session. Profit taking intensified with global worries and some weak results. None of the sectoral gauges looked in good health at close. Today, the start is likely to be flat-to-cautious as the global cues are mixed, though some bottom fishing may help the markets to recover. All eyes will be on the developments in Europe. Meanwhile, Montek Singh Ahluwalia, deputy chairman of the Planning Commission has been quoted saying that the finance ministry is likely to focus on fiscal consolidation in the coming annual budget. The power and cement companies, consumer of coal are likely to get some respite as Coal India has decided to rationalise prices in narrow bands for various grades of coal, though it will continue with the GCV based pricing. On the same time the export oriented companies are likely to be under pressure as FIEO on Monday warned that it would be difficult to achieve the $300-billion export target this fiscal until corrective policy measures were put in place. The US and the European markets accounted for about 26 per cent of India's merchandise exports and any disruption in these destinations was bound to cause a dent in the overall shipments.

There will some important result announcements to keep the market buzzing. ICICI Bank. IDBI Bank, PNB, NMDC, Crompton Greaves, Titan and TVS Motors are among the many to announce their numbers today.

The US markets remained in somber mood with the start of the new week, losing slightly on lingering European concern as the European Union summit failed to deliver as Greece and its private bondholders continued to struggle to reach a deal. Though, most of the Asian markets have made a green start after Greek Prime Minister Lucas Papademos said that major progress has been made in debt-swap talks. Japanese market was trading a quarter percent higher as its industrial production grew faster than expected, however unemployment rate unexpectedly rose last month in the country.

Back home, the wave of ruthless selling pressure owing to the downbeat economic growth numbers from world’s largest economy and growing uncertainty over an agreement to avert an onerous Greek debt default, callously bludgeoned Indian frontline equity indices on the first trading session of a new week. Bears finally got the opportunity to go on rampage for the first time in the New Year after recent sharp resurgence in Indian markets which saw the key gauges jump over eleven percent. The benchmarks got thrashed by around two and a quarter percent in the session and got dragged even below the psychological 5,100 (Nifty) and 16,900 (Sensex) levels. The bourses were caught amid the pandemonium of ruthless risk aversion as discouraging global leads along with disappointing domestic tidings dissuaded investors from opening fresh positions. Power Sector bellwether BHEL remained the main culprit in the session as it got pulverized by over ten percent on announcing worse than expected earnings for the third quarter of this fiscal and dented investors’ sentiments. Besides, downbeat result announcements from other stocks like NTPC, Indian Bank, Oriental Bank of Commerce too weighed down investors’ morale. Meanwhile, a CII survey underscored that business confidence in India has declined in the December quarter owing to uncertain global economy, rising interest rates and surging inflation. Earlier on Dalal Street, the benchmark got off to a gap down beginning following the hefty selling in Asian equities after investors largely remained influenced by gloomy global developments. After the somber opening there was continuous downslide for the frontline indices as they lacked enthusiasm to tread to higher levels amid absolutely no supporting cues. The selling pressure aggravated from the mid noon trades as European markets too collapsed. The indices’ southbound journey only halted with the close of trading session and the key gauges even slipping below crucial levels. Eventually, the NSE’s 50-share broadly followed index Nifty, got battered by around two and a quarter percent and settled below the psychological levels. On the BSE sectoral front, across the board position squaring was evident with the Capital Goods counter leading the space with 5.55% plunge. The Power and high beta Realty counters too went home with over 3% losses each. Though there appeared no sectoral gainer, however some individual names like Sun Pharma and Bajaj Auto managed to keep their heads above the water till the end. Finally, the BSE Sensex shaved off 370.68 points or 2.15% to settle at 16,863.30, while the S&P CNX Nifty plunged by 117.40 points or 2.26% to close at 5,087.30.

The US markets closed lower on Monday, as leaders in Europe gather to discuss the debt crisis for the seventeenth time in two years and tensions remained high with Portugal’s soaring borrowing costs. On domestic front, consumer spending stalled in December as Americans took advantage of a jump in incomes to restore depleted savings, indicating households remain focused on repairing finances. The Commerce Department reported that US consumer spending came to a virtual standstill in December after climbing 0.1% the month before. Retail sales, an earlier gauge of demand, showed spending lost momentum each month in the fourth quarter. Sales slowed from a 0.7 percent gain in October to a 0.1 percent increase in December.

In Europe, a surge in borrowing costs for Portugal raised fears that the country would have to follow Greece in writing down the value of its debts. Besides, Greek leaders appeared to be deadlocked in negotiations with international lenders to restructure debt losses of at least 50% and Greek finance minister rejected the calls to monitor future budgets by the European commissioner. Greece is likely to settle its differences with lenders probably as early as this week as the European Union summit began in Brussels.

The Dow Jones Industrial Average closed lower by 6.74 points, or 0.05 percent, at 12,653.70. The S&P 500 was down by 3.32 points, or 0.25 percent, at 1,313.01, while the Nasdaq closed down 4.61 points, or 0.16 percent, at 2,811.94.

Oil prices wilted on the first trading session of the week as concerns over the ongoing Euro-zone debt trouble lingered with EU policy makers struggling to carve out a concrete mechanism to avert the onerous debt crisis. The oil prices got undermined after OPEC’s secretary-general opined that the market is well-supplied and also after Iran decided to allow International Atomic Energy Agency into the nation and discuss its nuclear program. Besides, the appreciation in American greenback against a basket of currencies too made the dollar denominated fuel more expensive for holders of other currencies.

Benchmark crude for March delivery declined $0.78 or 0.8% to $98.78 a barrel on the New York Mercantile Exchange. In London, March delivery Brent crude slipped $0.71 or 0.6% to $110.75 a barrel.