Markets may get a flat-to-positive start; Greek debt talks to give direction

The Indian markets escaped late hour volatility unharmed in last session and climbed over half a percent, thanks largely to broad based buying across sectors. Stocks from the high beta - Realty, Capital Goods and Metal counters led the late recovery for the markets. Today, the start is likely to be flat-to-positive however the upside will remain capped by cautiousness looming over Greece’s debt deal. Meanwhile, investors will also be concerned over rating agency S&P’s warning that the balance of risk factors for India’s sovereign credit rating could tilt towards negative zone this year, given the headwinds being faced by the country on domestic and global fronts. In its move to improve liquidity situation, RBI opined that repurchase of government securities that have been contracted for sale will be allowed for transaction. Apart from this there will be lots of scrip specific actions to keep the markets buzzing and investors will keep a close eye on M&M ahead of its quarterly results which will be out later today.

Also there will be many other earnings announcements to keep the markets buzzing. Ballarpur Industries, Cadila Health, GMR Infra, Hindustan Oil, PVP Vent, Navneet Pub and United Brew are among the many to announce their numbers today.

Stocks in the US markets receded on Monday as Greece failed to come to an agreement before the deadline with the troika about a second bailout package however, talks on fresh bailout deal have been postponed to Tuesday. Markets there came off the session’s lows by the end and settled with only marginal losses. The Asian markets have started on a mixed note with the Chinese markets leading the losers in the space by plunging over a percent. Most other markets in the region have not budged a great deal from their previous closing levels.

Back home, Indian frontline equity indices somehow managed to escape the wild swings in the dying hours of trade unaffected as they finished the session with over half a percent gains. Just when it appeared that the benchmarks will conclude another positive session with good gains, hefty bouts of selling pressure emerged abruptly in the last leg of trade, which dragged the key gauges to the lowest point in the session. However, the kneejerk selling pressure was immediately countered before the close of session as it seemed like the bulls had the last say as they stalled the declining momentum of the benchmarks and took the key indices to the highest point in the session. Stocks from the high beta - Realty, Capital Goods and Metal counters led the late recovery for the markets as they rallied in the range of 1.5-4%. Benchmarks carried forward the gaining momentum even after the over two percent rally in the previous week, as sentiments were bolstered early in the session on the back of unexpectedly encouraging US jobs data, signaling that worries over deep recession are making way for economic recovery. Besides, upstream oil companies had more reasons to worry since reports suggested that the government increased subsidy burden on the state-run oil refiners by asking them to compensate around 38% of revenue losses on fuel sales during April-December 2011. Meanwhile, global rating agency S&P’s in its latest report has highlighted that India is facing some challenges on a few fronts, and the balance of risk factors for the sovereign credit rating may be shifting slightly toward the negative. Earlier on Dalal Street, the benchmark got off to a gap up opening tracking the impressive leads from Asian markets on the back of encouraging over the weekend leads from the US. Thereafter, the bourses remained in fine fettle through the next two hours. But in late morning trades the optimism in the markets showed signs of petering out. Hefty bouts of selling pressure in mid noon trades even dragged the bourses to the neutral line. However, the resilient indices did not capitulate to the extreme volatility and rebounded to eventually extend the northbound journey for the fifth straight session. On the BSE sectoral space, rate sensitive Realty counter along with the Capital Goods sector remained prominent gainers while defensive-Healthcare index was the only chink in the armor with marginal losses. Finally, the BSE Sensex rose 102.35 points or 0.58% to settle at 17,707.31, while the S&P CNX Nifty surged by 35.80 points or 0.67% to close at 5,361.65.

The US markets closed in red on Monday, and the fall followed after a five-week advance for the S&P 500 and Nasdaq, as Greek leaders wrestled with spending cuts to get aid and avert a default. The markets came under pressure at the opening after Greek leaders and international troika failed to meet the deadline for the debt restructuring and the conditions for the future bailouts. The leaders turned up the heat on Greek politicians to accept the conditions for another round of rescue funds needed to avoid a government default. In Athens, a meeting of Greek political leaders was postponed until Tuesday as they worked to devise a uniform reply. Besides, European leaders stepped up pressure on Greek politicians to accept the conditions for a 130 billion-euro ($171 billion) bailout, saying time was running out. The Dow Jones Industrial Average closed lower by 17.10 points, or 0.13 percent, at 12,845.10. The S&P 500 was down by 0.57 points, or 0.04 percent, at 1,344.33, while the Nasdaq closed down 3.67 points, or 0.13 percent, at 2,901.99.

Crude oil prices plunged around a percent on Monday as sentiments were pummeled by increasing worries over fuel demand prospects after Greece missed the deadline for a deal and extended talks to avoid a default amongst warnings from the rest of Europe to find a solution. Investors’ risk appetite also was soured by the appreciation in American greenback against a basket of currencies which made the dollar denominated oil more expensive for holders of other currencies. However, Brent crude on the other hand rose for fifth session in a row on geopolitical concerns surrounding Iran and Nigeria, and a cold snap in Europe. Benchmark crude for March delivery sank $0.93 or 1% to $96.91 a barrel after trading as high as $97.75 as low as 96.38 a barrel on the New York Mercantile Exchange. In London, March delivery Brent crude surged $1.35 or 1.18% to $115.93 a barrel.