Domestic markets likely to get a cautious start

The Indian markets managed to gather gain of about half a percent on Wednesday after declining for previous consecutive three sessions. Though, the trade remained volatile but the heavy weights helped the markets for a bounce back. Today, the start is likely to be cautious as the global cues are not looking very optimistic; also there is no trigger from the domestic front amid the political jitters after the Prime Minister Manmohan Singh attacked anti-corruption campaigner Anna Hazare, saying his motive “totally misconceived”. Meanwhile, the realty sector is not likely to get any respite from their plunge as the country’s competition regulator is planning to initiate an investigation next week to find whether the practices for which it fined DLF Rs 630 crore, are the norm at other real estate companies too. Also, amid the debate over whether or not to allow corporate houses to enter into the banking sector, the finance ministry is planning to bar industrial houses conducting business in four sectors, including real estate, from seeking banking licences. The corporates, however, may be allowed to apply for new licences subject to strict riders.  The draft guidelines, which are expected by the end of the week, will be released for consultations after which they would be finalised.

There will be lots of scrip specific movements along with some result announcements to keep the markets buzzing. Ballarpur Inds, GTL and Gravity India will be announcing their numbers today.

The US markets made a mixed closing, while the Dow and S&P closed marginally higher Nasdaq lost about half a percent. Though there were good earnings announcements but the mixed forecasts and the inflation at the wholesale level rising to 0.2 percent in July, weighed on the investors’ sentiments. The Asian markets have made a mixed start with some of the indices trading lower by about half a percent, as the yen approached a post-World War II high against dollar.

Back home, the Indian equity markets managed to garner some gain despite a very volatile trade on Wednesday. The benchmarks started on a positive note similar to the previous session and after surging in the early trade, succumbed to profit booking by the noon, slipping into the red terrain. Though, it followed many recovery bouts that helped the benchmarks close in green, recovering some of the previous session losses. Some short covering and selective buying led the markets higher in early trade, the heavyweights remained in demand and risk averse investors opted to go for the fundamentally strong stocks. On the political front there was uproar in the parliament after Prime Minister Manmohan Singh told Parliament that the civil activist was trying to “impose” his version of Lokpal Bill. Back on street, the domestic markets made a cautious start after the US markets closed in red on getting mixed economic reports and on the lingering worries about the European debt crisis after the inclusive meeting of the leaders of Germany and France. However, the benchmarks slowly started gaining pace and by mid morning session surged to the high points of the day with BSE benchmark index, Sensex regaining 17000 mark and S&P CNX Nifty crossing 5100 mark. Though after wards profit booking started and markets started paring gains and once the European markets made a soft start, the benchmarks completely lost their way, plunging into red. That gave an opportunity for some short covering at lower levels and the markets again started crawling back, though the move never looked confident and there were lots of ups and downs till the end. IT performed extraordinarily well for the day and garnered gains of over 2 percent on the BSE, closely followed by the technology and FMCG gauges. However the rate sensitive sectors viz; realty, banking and auto remained the laggard of the day, losing over a percent each, while the realty stood as the worst performer for the second day in row, mainly due to catastrophic fall in DLF which lost another over 6 percent after the Competition Commission of India (CCI) imposed a fine of Rs 630 crore on the biggest real estate developer in the country, for misusing its dominant market position in connivance with Haryana government agencies. The other non sectoral gauge that suffered brutal assault was airline and all the major companies like Jet Airways, Kingfisher Airlines and Spicejet touched their fresh 52 week low, declining by 5-13 percent. The broader markets too continued being butchered session after session and lost another more than a percent for the day. Finally, the BSE Sensex gained 109.86 points or 0.66% to settle at 16,840.80, while the S&P CNX Nifty advanced by 20.80 points or 0.41% to close at 5,056.60.

The US market closed mixed on Wednesday while Dow and S&P gained marginally, Nasdaq was weighed down by forecast of weaker sales by Dell Inc. the indices pared their early gains with two Federal Reserve officials warning against applying too much stimulus to the economy and Labor Department reporting US producer prices increased by 0.2% in July.

The market rose in the early trade on couple of good earnings announcements but as the personal-computer maker Dell Inc. reported tepid consumer demand and gains in market share by Apple Inc. to be the reason behind crimping its sales forecast, the markets started losing weight. Also a data released by the US Labor Department showed that US producer price index rose 0.2% in July following a 0.4% decrease in June. The core producer price index, which excludes the food and energy sectors, rose 0.4% in July after climbing 0.3% in June. The report showed the cost of crude goods dropped in July for a third consecutive month, led by declining petroleum and food prices.

The Dow Jones industrial average gained 4.28 points, or 0.04 percent, to 11,410.21. The Standard and Poor's 500 closed higher by 1.13 points, or 0.09 percent, to 1,193.89, while the Nasdaq composite lost 11.97 points, or 0.47 percent, to 2,511.48.

Crude prices rebounded after the previous day's fall and ended higher on Wednesday, on getting a government report of a sharp drop in gasoline stockpiles. The Energy Information Administration (EIA) said gasoline inventories fell 3.51 million barrels in the week, to lowest level since May 20.However the economic news were a bit subdued  and prevented any sharp rise in the prices, US wholesale prices outside of food and fuel rose at the fastest pace in six months in July.

EIA said crude oil inventories rose by 4.233 million barrels in the week ended Aug. 12, while the distillates stocks (diesel/heating oil) rose 2.449 million barrels in the week.

Benchmark crude for September delivery rose 93 cents, or 1.07 percent, to settle at $87.58 a barrel, after trading in a range from $86.65 to $89.00 on the New York Mercantile Exchange. In London, October Brent crude was $2.28 higher, at $111.41 a barrel on the ICE.