Markets to start on a flat-to-positive note as global cues remain supportive

The Indian markets closed with good gains in last session and largely outperformed their Asian peers which reeled under selling pressure after Moody's downgrade. The encouraging January WPI inflation data lifted domestic sentiments while positive cues from European markets in late hours too helped the key indices to settle above psychological levels. Today, the local markets are likely to sway with their Asian peers and start on flat-to-positive note. An empowered group of ministers headed by the Finance Minister is scheduled to meet later in the day to discuss disinvestment of stakes in state-run ONGC and BHEL. Among individual stocks, investors also will keep a close eye on index heavyweight Reliance Industries amid reports that gas output from its D6 block, which currently produces about 37 mmscmd of gas, is expected to fall by about 10% to 34 million standard cubic metres a day (mmscmd) by April. Also Unitech could be on investors' radar on reporting 50% drop in consolidated net profit for the third quarter ended December 2011. Apart from this there will be lots of scrip specific actions to keep the markets buzzing.

The US markets managed to close on a flat note on Tuesday as the markets there recovered in late trade after a dismal start. The weaker than expected US retail sales numbers and lingering delays with euro-zone debt resolution along with Moody’s downgrades, dampened investors’ morale. The Asian markets have mostly made a positive start with the Japanese markets taking the lead by surging close to two percent in the morning session. Markets in the region gained strength from reports that the Greek conservative party leader would deliver a letter of commitment to lenders today.

Back home, Indian stock markets staged a smart performance on Tuesday as the frontline indices settled above important psychological levels and extended the gaining streak for the second straight session. The climb of around half a percentage point for the benchmarks appeared even more prominent given the fact that the gains came on a day when equity indices largely across Asia exhibited pessimistic trends after global rating agency Moody's announced a slew of credit rating downgrades of European nations. However, the encouraging WPI inflation numbers for January provided the much needed support to the local markets and prevented downside chances for the bourses. The wholesale price index slowed to its lowest level in more than two years in January to 6.55% against 7.47% in December. Investors piled up positions in the rate sensitive counters like Realty, Banking and Auto post the announcement of better than expected inflation numbers on expectations that the pressure on RBI will now increase to cut rates to prop up the country's economy growth momentum. On the earnings front, Tata Motors got commended for its better than expected third quarter numbers and rallied close to four percent in the session. On the global front, Asian markets settled on weak note while the European counterparts traded in the green territory as encouraging German economic data outweighed concerns over Moody’s rating downgrades. Earlier on the Dalal Street, the benchmark got off to a negative opening as investors largely remained influenced by the pessimistic sentiments prevailing in Asian markets. After the weak opening, the frontline indices gained some steam and clawed back into the green terrain. The gauges kept see-sawing in a very tight band through the day’s trade as the bourses remained in the consolidation mode. However, hefty buying in the dying moments of trade helped the main gauges to climb above key levels by the end. Moreover, the broader markets showed resilience and finished the session with strong gains of around a percent, outperforming their larger peers. Finally, the BSE Sensex gained 75.73 points or 0.43% to settle at 17,848.57, while the S&P CNX Nifty rose by 25.85 points or 0.48% to close at 5,416.05.

The US markets recouped most of their losses on Tuesday, as investors reassessed Greece’s prospects for getting new bailout package and US retail sales that, despite being weaker than expected, still showed some improvement. The leader of Greece’s New Democracy party and possible next prime minister, is expected to deliver a commitment to the country’s international lenders. European leaders balked at handing out the new rescue funds, in part over worries the current Greek leaders who make the austerity pledges would be ousted in spring elections. The leaders of Greece’s biggest political parties will send commitments to the so-called troika to stand by austerity measures. Besides, finance ministers cancelled a Brussels meeting scheduled to be held tomorrow and demanded more conditions from Greek lawmakers in a telephone conference before releasing the next tranche of bailout funds. The US retail sales in January rose less than anticipated but more than a sign that the US recovery was in danger of collapse. The Commerce Department stated that retailers’ sales rose a seasonally adjusted 0.4% in January, short of forecasts for a 1% increase, mostly because of weakness in automobile sales. Another report from Labor Department showed import prices increased more than expected in January after crude oil and food prices rebounded. The Dow Jones Industrial Average closed higher by 4.24 points, or 0.03 percent, at 12,878.30. The S&P 500 was down by 1.27 points, or 0.09 percent, at 1,350.50, while the Nasdaq closed up 0.44 points, or 0.02 percent, at 2,931.83.

Crude oil prices slipped lower but managed to settle above the psychological $100 a barrel mark on Tuesday. Investors at large took to risk aversion after Moody’s kept the coveted AAA credit rating for France and the UK on negative watch while it downgraded the ratings of Italy, Portugal, Spain, Slovakia, Slovenia and Malta. The weaker than expected US retail sales figures too dented market confidence while strength in dollar against a basket of currencies made fuel prices expensive for overseas investors. Benchmark crude for March delivery eased $0.17 or 0.2% to settle at $100.74 a barrel after trading as high as $101.84 and as low as $100.28 a barrel on the New York Mercantile Exchange. In London, March delivery Brent crude rose $0.23 or 0.2% to $118.16 a barrel.