Markets to make a good start, may recover previous day losses in early trade

The Indian markets closed with about half a percent of loss in last session. Today, the start is likely to be good on positive global cues. The markets are likely to concentrate on domestic macro development, though the weekly food inflation has moved higher but the traders will be eyeing the IIP data to be announced today. The core sector registered a growth of 5.2 per cent compared to 4.4 per cent in June 2010 and the base impact is likely to continue on the IIP numbers for June as well. However, PMEAC chairman C Rangarajan is expecting the industrial production index - a measure of factory output - to improve after August. Export sector stocks are likely to be in jubilant mood as the export from country surged by 82 percent in July.

There will be lots of result announcements and scrip specific actions to keep the markets buzzing. Jaiprakash Associates, JSL, Jindal Saw, Patel Engr, Spicejet, Sterling Bio, Tata Steel, Tech Mahindra, Punj Lloyd, Reliance Media and REI Agro are among the many to announce their numbers today.

There is a new listing today, L&T Finance Holdings a subsidiary of engineering and construction company Larsen and Toubro, will be listing its equity shares on the bourses. The company has fixed issue price at Rs 52 a share while the price band was 51-59 a share. The issue, which opened between July 27-29, was subscribed more than 5 times. Company intends to use issue proceeds for augmenting the capital base of L&T Finance and L&T Infra to meet the capital requirements arising out of expected growth in their assets, primarily the loan portfolio.

The US markets are showing wild moves and went for a massive rally on Thursday after witnessing a severe plunge in day ago. The number of people filing for unemployment benefits for the first time fell and that spurred optimism that economy might not be heading into another recession. The Asian markets have made an all green start and some of the indices are even higher by one percent, taking cues from unexpected drop in US jobless claims.

Back home, Indian benchmarks failed to extend the gaining momentum on Thursday as jittery investors chose to take profits off the table amid extreme volatility and uncertainty over the direction of market in the backdrop of lingering worries emerging from both sides of the Atlantic. Apart from the global concerns, markets also witnessed some disappointing developments on the domestic front which did not augur well with investor’s sentiments. The benchmarks showed great resilience against the overnight carnage in US and European markets on the back of rumors that Societe Generale was on the verge of collapse and France could soon lose its top-notch credit rating if it is forced to bail out its banks. Though, the domestic bourses soon bounced back into the green after the French bank clarified, denying it as “all market rumors” and called for an investigation. Back home, the economic reports added to pessimism with the disappointing food inflation numbers released by the government which showed that the annual rate of food inflation accelerated to four and half a month high levels to 9.90%, and the fuel price index climbed 12.19% in the year to July 30. Earlier on Dalal Street, the indices slipped by around half a percent on the opening bell as sentiments remained influenced by the Asian markets which mostly traded on a weak note tracking gloomy global cues. After hitting lowest levels in the early trades the equity indices slowly but steadily recuperated and clawed back into the green zone in early noon trades. But the key indices struggled to hold on to the gains amid deteriorating cues from the European stock markets and failed to negotiate a close in the green terrain and settled around the day’s lows. Eventually the NSE’s 50-share broadly followed index Nifty, slipped by around half a percent to settle below the crucial 5,150 support level while Bombay Stock Exchange’s Sensitive Index, Sensex shed over seventy points and ended above the psychological 17,050 mark. The broader markets too traded without any fervor and closed in line with their larger peers.  On the sectoral front, the rate sensitive counters like Banking and high beta Real Estate did the maximum damage and shaved off around a percent. Information Technology pocket once again bore the brunt of hefty selling pressure as the worries over global economic slowdown did not augur well for the Indian IT industry which relies heavily on outsourcing work from US and European region. Finally, the BSE Sensex lost 71.11 points or 0.42% to settle at 17,059.40, while the S&P CNX Nifty declined by 22.70 points or 0.44% to close at 5,138.30.

The US markets surged on Thursday reversing most of Wednesday’s plunge, supported by unexpected drop in jobless claims and higher-than-estimated earnings coupled with trade deficit, which was smaller than expected.  A drop in first-time jobless claims calmed nerves about the economy. The labor Department stated that the first-time applications for jobless benefits decreased 7,000 in the week ended August 6 to 395,000, the fewest since early April. The Labor Department further said the number of people on unemployment benefit rolls and those getting extended payments also dropped. There were better- than-estimated earnings from Cisco Systems Inc. and News Corp. which helped improve the sentiments of the market.

The Dow Jones industrial average gain 423.37 points, or 3.95 percent, to 11,143.30. The Standard and Poor's 500 closed higher by 51.88 points, or 4.63 percent, to 1,172.64, while the Nasdaq composite was up by 111.63 points, or 4.69 percent, to 2,492.68

The crude prices surged once again on Thursday and prices moved higher by over 3 percent for the day on the back of equities rally and a supportive drop in jobless claims. Earlier the prices declined on fears that Europe's debt problems might spread to France, further slowing the global economy and curbing oil demand but finally it was the good jobs data that helped offset concerns about French banks.

Meanwhile, Fitch on Wednesday raised its 2011 US benchmark crude West Texas Intermediate base case crude oil price estimates and long-term price estimates, saying robust demand from developing economies offset stable to modestly negative demand from most developed countries.

Benchmark crude for September delivery rose $2.83, or 3.41 percent, to settle at $85.72 a barrel, trading from $81.03 to $85.90 on the New York Mercantile Exchange. In London, Brent contract for September rose $1.34, or 1.2 percent, to settle at $108.02 a barrel on the ICE.