Markets likely to resume gaining momentum on encouraging global cues

The Indian markets closed with marginal loss in last session as investors chose to take some profits off the table after the recent sharp rally. The markets slipped to intraday lows in late morning session, but recovery in the second half however, minimized the extent of damage for the bourses. Today, the domestic markets are likely to open on a positive note following the sanguine sentiments prevailing in Asian and overnight US markets. Information Technology shares will remain in investors’ focus after industry body Nasscom opined that the industry witnessed a CAGR of 17 percent during the five-year period of 2007-12 despite turmoil in the US and in European Union. For the next eight years, it has forecasted a CAGR of 13 percent to get to the targeted $225 billion by 2020 from $101-billion achieved this year. Meanwhile shipping stocks are likely to be on investor’s radar as reports suggest that committee of secretaries would hold a meeting later in the day to discuss shipping subsidy. On the same time the airline companies may see some action as the civil aviation ministry has recommended security checks by the home ministry and clearance by the Foreign Investment Promotion Board as the critical modalities for allowing foreign airlines to take up to 49% stake in Indian carriers. Apart from this there will be lots of scrip specific actions to keep the markets buzzing.

Apart from this there will be some scrip specific actions to keep the markets buzzing, while investors would also keep a close eye on the earnings announcement of stocks like Essar Oil and Crisil which are scheduled to report their third quarter result later in the day.

The US markets surged over around a percent on Thursday as sentiments got a boost from the encouraging weekly jobless claims data which slipped to lower than expected levels. Also some other positive US economic data supported sentiments while reports that ECB would agree to exchange their Greek bonds for new ones, alleviated concerns over Greek debt crisis. Asian markets have made a positive start with the benchmarks in Japan and South Korea being leading gainers in the space after climbing over one and half a percent each.

Back home, a session after staging a stupendous over two percent rally, Indian benchmark equity indices went on to consolidate the gains and settled with moderate cuts. Though, the frontline indices failed to extend their gaining momentum and snapped the three session gaining streak, however the recovery in the second half minimized the extent of damage for the bourses. The psychological 5,500 (Nifty) and 18,100 (Sensex) levels proved as strong supports as the benchmarks rebounded after hitting intraday lows. Investors took to mild profit booking after the recent sharp uptrend as sentiments remained bleak across the Asian region after reports indicated that the second bailout package to Greece will be delayed until after the country holds elections in April 2012, reigniting worries that Europe will struggle to avert its debt debacle. Hefty profits booking in index heavyweights like Coal India and Reliance Industries along with high beta metal stocks like Hindalco and Sterlite exerted pressure on the frontline indices. Coal India bore the maximum brunt of selling pressure as it slumped  over five percent on concerns of falling margins over assured coal supply to power producers while Reliance got pounded amid reports of falling gas output from its KG-D6 well. Meanwhile, airline stocks like Kingfisher, Jet Airways and Spice Jet rallied higher after state-owned oil companies have cut jet fuel prices by a marginal Rs 350 per kiloliter, the second reduction in this month. Stocks like ONGC and BHEL too settled in the positive zone after an empowered group of ministers has approved the auction route for selling 5 percent stake in state-run oil major ONGC while it postponed disinvestment in BHEL to the next fiscal. Earlier on the Dalal Street, the benchmark got off to a weak opening as investors largely remained influenced by the gloomy sentiments prevailing in Asian markets. After the subdued opening, the frontline indices got dragged to lowest levels in late morning session as cautious investors took to profit booking. However, the pessimism withered in the second half and the benchmarks showed signs of recovery since mid afternoon trades. The key gauges hit the highest point in late hours but settled off the intraday highs. Moreover, the broader markets showed resilience and settled with strong gains, outperforming their larger peers by a fat margin. Finally, the BSE Sensex lost 48.42 points or 0.27% to settle at 18,153.99, while the S&P CNX Nifty declined by 10.00 points or 0.18% to close at 5,521.95.

The US markets jumped on Thursday, as the outlook for Greece’s bailout improved, American jobless claims slid to a nearly four-year low and manufacturing bolstered optimism in the economy. The number of US applicants filing first-time claims for unemployment benefits last week fell by 13,000 at 348,000, the lowest level since March 2008. The four-week average also declined, down 1,750 at 365,250, to hover near a four-year low. The indexes continued their gains after the Philadelphia Federal Reserve’s manufacturing index in February rose to 10.2, the highest level since October and better than expected. Other economic reports had housing starts up 1.5% in January and wholesale prices climbing 0.1% on the month.

Besides, European Central Bank officials indicated that the central bank is willing to participate in a complex scheme to distribute the gains in Greek bonds to member nations. The European Central Bank would swap its Greek bonds for newly issued ones that are likely further out in maturity, to give Greece some breathing room. The swap would also protect the ECB and other central banks that make up the euro from efforts to force the central bank to take losses connected to negotiations between Greece and its private-sector bondholders. ECB officials have refused to take losses on their Greek bonds. In addition, German officials also confirmed that Germany is likely to push for the release of bailout funds for Greece at the next meeting on February 20.

The Dow Jones Industrial Average closed higher by 123.13 points, or 0.96 percent, at 12,904.10. The S&P 500 gained by 14.81 points, or 1.10 percent, at 1,358.04, while the Nasdaq was up by 44.02 points, or 1.51 percent, at 2,959.85.

Indian ADRs closed mixed on Thursday, Infosys Technologies was up 0.62%, Dr. Reddy’s Lab was up 0.15% and ICICI Bank was up 0.14%. On the flip side, Tata Motors was down 0.31% and Tata Communications was down by 0.10%.

Crude oil prices extended their winning streak for the fourth straight session and scaled the highest levels in seven weeks on Thursday after amassing around half a percent gains. Oil prices rose amid deepening supply side worries from Iran which has warned to cut off crude supplies to Europe, well ahead of a European Union embargo. Besides, the rebound in US dollar against the euro too buoyed sentiments on reports that ECB had agreed to exchange Greek bonds they hold for new bonds as part of a deal to help the debt-strapped country.

Benchmark crude for March delivery advanced $0.57 or 0.5% to settle at $102.37 a barrel after trading as high as $102.69 and as low as $100.84 a barrel on the New York Mercantile Exchange. In London, April delivery Brent crude surged $1.18 or 1% to close at $120.11 a barrel.