Markets likely to see a cautious start, profit booking too can appear at higher levels

The Indian markets surged in the last session supported by the rally in capital goods and realty sector stocks, though there was not much from the domestic or global economic front but traders went for value picking and took the major indices higher by over one and half a percent. Today, the start is likely to be slightly soft-to-cautious and traders might go for some profit booking after the sharp rally. The gold financing companies are likely to be under pressure as Reserve Bank of India has come out with curbs on the business, restricting loans to 60% of the jewellery value and bar loans against coins and gold biscuits. Today, Coal India's board will meet to finalise the fuel supply agreement (FSA) with power plants, also an EGoM is likely to take up Vedanta's proposal for BALCO & HZL. There will be some buzz in the steel stocks too after the SAIL’s indication that with imports of steel becoming costlier, the company would have a close look at whether to hike prices or absorb them. Other companies are likely to follow the trend of the steel major. 

The US markets showed mixed trend on Wednesday on getting a disappointing report on the housing market and bearish comments from Federal Reserve Chairman Ben Bernanke on Europe. He also cautioned that higher energy prices could curb short-term growth in the country. Most of the Asian markets have made a green start on reports of weaker though stabilizing US housing markets. However, the Chinese market was slightly in somber mood despite easing lending curbs for rural banks. On the same time the Japanese market was trading higher on reports of an unexpected trade surplus for February and higher-than-forecast exports.

After a session of consolidation and even starting Wednesday’s session on a dull note, not many would have expected Indian stock markets to stage the kind of vivacious performance they showcased by rallying well over one and half a percentage points and re-capturing the psychological 5,350 (Nifty) and 17,600 (Sensex) levels. The markets traded on a lackluster note in early moments as the key indices kept oscillating in a tight range around the previous closing levels. However, after breaking the psychological 5,300 (Nifty) and 17,400 (Sensex) levels in early afternoon trades, there was no turning back for the frontline indices. Benchmark equity indices kept rallying through the session and the skyward journey only halted with the close of trade, thanks to tentative improvement in market participants’ risk appetite. The excessive liquidity in the global markets probably drove the local markets in anticipation of some major policy decisions on any of the issues which have been pending for a long time. Meanwhile, reports showed that FDI in India increased by a whopping 92% as foreign inflows were to the tune of $2 billion in January 2012 as compared to $1.04 billion in January 2011, buttressing sentiments. Across the board buying interests was evident as investors covered hefty short positions that got build in a recent sell-off while value based buying too helped the market rally. Hefty buying was seen in the beaten down Capital Goods counter which jumped over three and half a percent after heavyweights like L&T and BHEL rallied. The rate sensitive Realty and Banking pockets too witnessed hefty position build up a day after RBI Deputy Governor opined that initiatives taken in the budget to improve growth in agriculture sector combined with the slow pace of growth could help inflation moderate in coming months. Finally, the BSE Sensex surged 285.53 points or 1.65% to settle at 17,601.71, while the S&P CNX Nifty soared by 90.10 points or 1.71% to close at 5,364.95.