Markets to get a positive start of new month

The Indian markets made a smart bounce back in last session to recover their losses of a day ago, the global optimism coupled with some good earnings announcements helped the markets to move higher. Banking and metal gauges were the most to gain for the day. Today the start is likely to be in green with markets extending their gains in the new month, however some profit booking at the higher levels too cannot be denied in later trade. The telecom stocks are likely to be under pressure as the Telecom ministry has issued show-cause notices to five private operators including, Bharti Airtel, Vodafone and RCom, for under reporting revenues, as per a special audit report, for assessment years 2006 to 2008. Tata and Idea Cellular have also been served notices by the Department of Telecom (DoT) which has given 21 days time to respond to the notices. The department has raised a demand of Rs 1,637 crore from these telecom firms. Traders will be eyeing the money market too as the rupee is strengthening, while the  RBI is likely to conduct more debt buybacks through open market operations to meet cash shortages in between monetary policy reviews.

Also there will be lots of result announcements to keep the markets buzzing. Ashok Leyland, Finolex Cables, Satyam Computers, Tube Investments, Uco Bank and Welcorp  are among the many to announce their numbers today.

The US markets though ended mixed on the last trading day of January but managed to mark best January in 15 years, and S&P held above the psychologically important 1,300 level. Though, the start of the markets was on optimistic note after Greek Prime Minister Lucas Papademos said he hopes to reach a deal with private creditors over the nation’s debt by the end of the week but later the trade turned weak on report that US single-family home prices fell more than expected in November. Most of the Asian markets have made a positive start amid optimism about progress on a Greek debt deal and taking support of a report of unexpected expansion in Chinese manufacturing.

Back home, a session after being pulverized by over two percent, Indian frontline equity indices staged a smart bounce back thanks to rebound in investors’ risk appetite across the globe amid renewed hopes that the long-awaited bond swap between Greece and its private sector creditors will almost be concluded this week. The benchmarks completely regained all the ground lost in the previous session and settled just a kissing distance away from the psychological 5,200 (Nifty) and 17,200 (Sensex) levels. Encouraging global leads along with supportive domestic tidings persuaded investors to build up positions in Indian equities through the first month of the New Year which helped the frontline gauges to accumulate a gargantuan 11.3 percent gains in January and register its first monthly rise in three. The surge in the month of January was not only the biggest since September 2010 but also the best January rise for the benchmark since a 19.4 percent rise in 1994. Sentiments in Tuesday’s session were upbeat as apart from hopes that deal would soon be struck between Greece and private investors, leaders from European Union agreed upon employing stricter measures aimed at making it harder for violators to escape sanctions and to restore confidence in their single currency. Earlier on Dalal Street, the benchmark got off to a promising start after investors largely remained influenced by encouraging global developments and upmove in Asian markets. After the sanguine opening there was no turning back for the frontline indices as they vivaciously rallied with great enthusiasm amid supporting global cues. The markets got underpinned further in the dying hours of trade and the northbound journey only halted with the session’s close, erasing almost all the losses suffered in the previous session. Eventually, the NSE’s 50-share broadly followed index Nifty, surged with triple digit gains and settled a tad below the psychological 5,200 support level while Bombay Stock Exchange’s Sensitive Index - Sensex slammed a triple hundred to close below the psychological 17,200 mark. On the BSE sectoral front, across the board position build up was evident with the Banking counter leading the space with close to 4% gains. The high beta Realty and Auto pockets too went home with over strong gains of 3.51% and 2.37% respectively. Though there appeared no sectoral laggard, however some individual names like Coal India settled in the red with close to three percent cuts after the coal ministry rolled back its proposal to hike prices under a new pricing policy. Finally, the BSE Sensex climbed by 330.25 points or 1.96% to settle at 17,193.55, while the S&P CNX Nifty surged 111.95 points or 2.20% to close at 5,199.25.

The US markets made a mixed closing on Tuesday, with the indexes mostly slipping after US economic data failed to live up to expectation. The reports showed that American consumer confidence trailed estimates and business activity cooled in January casting doubt on the strength of the US economy. Both the Dow Jones Industrial Average and the S&P 500 recorded their best percentage jump for the month of January since 1997. The Nasdaq Composite recorded its best January since 2001. The markets turned lower after a gauge of confidence among US consumers unexpectedly fell in January. The Conference Board’s sentiment index declined to 61.1 from a revised 64.8 in December. Also, the Institute for Supply Management-Chicago reported its gauge of business activity declined to 60.2 in January from 62.2 last month. Another report had residential real estimate prices dropping more than expected in November. The S&P/Case Shiller Composite, the controversial index tracking metropolitan homes prices declined 0.7% in November and extended declines by the same amount in October and September. Separately, the Commerce Department stated home ownership declined to 66% in the fourth quarter from the 66.3% in the third and hovered near the lowest level since 1998.

Meanwhile, the European Union leaders finalized a treaty at a meeting in Brussels that quickens sanctions on nations running high deficits. European Union leaders, meeting in Brussels yesterday, completed a fiscal-discipline treaty that speeds sanctions on high-deficit states. Besides, Greek Prime Minister Lucas Papademos stated that he is strongly committed to reaching a debt-swap pact with bondholders. However, euro area jobless rate remained unchanged but stayed above 10% in December as Spanish jobless rate rose to 22.9% and Greek rate to 19.2%.

The Dow Jones Industrial Average closed lower by 20.81 points, or 0.16 percent, at 12,632.90. The S&P 500 was down by 0.60 points, or 0.05 percent, at 1,312.41, while the Nasdaq closed up 1.90 points, or 0.07 percent, at 2,813.84.

Crude oil prices erased all gains by the end of Tuesday’s session to settle on a flat note ahead of the release of the weekly US crude stockpiles data which were likely to show an increase in inventory. The oil prices got some support in early trades on the back of the depreciation in US dollar while sentiments also were positive as the EU moved closer to agreeing on a permanent $657.15 billion bailout fund. However, the disappointing Euro-zone employment data for December coupled with downbeat US consumer confidence reading dissuaded investors and led to profit booking.

Benchmark crude for March delivery eased $0.30 or 0.2% to $98.48 a barrel on the New York Mercantile Exchange. In London, March delivery Brent crude rose $0.23 or 0.2% to $110.98 a barrel.