Markets likely to get a quiet start after a sharp upmove

The Indian markets went for a splendid run in last session, surging by over two percent. The IT and technology stocks zoomed as the rupee declined to two years low against the dollar, boosting the profitability margin of the outsourcers. Today, the start is likely to be cautious as the global cues are not giving any clear indication. All eyes will be on the US for a Fed’s announcement. However, the International Monetary Fund has cut its forecast for global growth to 4% and warned of "severe repercussions" to the global economy unless euro-zone nations strengthen their banking system. The IMF said that India's growth is likely to slow to 7.8% this year from 10.1% in 2010. Overall, the IMF reduced its estimate of global growth by 0.3 percentage point since its most recent estimate in June. For 2012, the IMF forecast world growth would remain steady at 4%, a 0.5-percentage-point reduction from its June estimate.

Meanwhile there is a good news for mining and power companies as the government is likely to scrap the policy of splitting coal mining zones into ‘go and no-go’. Power segment is likely to be buzzing with other reason; Indian Power Minister Sushil Kumar Shinde has urged US entrepreneurs to invest in India’s growing power sector. He said the funding requirements in power sector during the current five year plan (2007-12) is estimated at $230 billion and similar investment would be required in the next five year plan period.

The US markets made a mixed closing on Tuesday after a very volatile session, the concerns of European debt default and ahead of Fed meeting results the mood remained the cautious in the markets. The Asian markets too have made a mixed start with some indices trading lower by about a percent in the early trade amid concern Europe’s sovereign-debt crisis will hurt global economic growth.

Back home, a session after displaying a distressing performance, Indian benchmark indices have managed to pull through a scintillating performance by vivaciously rallying over two percentage points on Tuesday, thanks to the hefty short covering in the beaten down information technology and rate sensitive counters. The relentless across the board value picking ensured that the frontline indices settle just shy of the psychological 5,150 and 17,100 levels amid the tentative recovery in risk appetite globally. Earlier on Dalal Street, the benchmark got off to an optimistic opening, shrugging the sluggish sentiments prevailing in Asian markets post after S&P downgraded Italy's sovereign rating by one notch to A. The frontline indices soon gathered momentum and traded with around a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying moments. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Finally the NSE’s 50-share broadly followed index Nifty, amassed triple digit gains to settle just below the crucial 5,150 support level while Bombay Stock Exchange’s Sensitive Index or Sensex smashed a triple century and closed just shy of the psychological 17,100 mark. Moreover, the broader markets too showed a dramatic recovery after the bulls powered up post afternoon trades on the back of a recovery in global sentiments. On the BSE sectoral space, the information technology counter garnered maximum traction and surged by over three percent on the back of solid gains in bellwethers like TCS, Infosys and Wipro. The consumer durables pocket too witnessed huge buying interests as it gained well over two and half a percent while rate sensitive’s like Bankex, Automobile and high beta - Realty too remained among prominent gainers. However, PMEAC chairman C Rangarajan, admitted that the continuous rate hike by RBI may have some impact on economic growth but was confident that the GDP growth in this financial year will be around 8% from 8.6% a year ago. Finally, the BSE Sensex jumped 353.93 points or 2.11% to settle at 17,099.28, while the S&P CNX Nifty zoomed by 108.25 points or 2.15% to close at 5,140.20.

The US markets made a mixed closing on Tuesday, amid concern that international officials won’t make a decision on Greece’s next aid payment until October. Though the indexes advanced sharply at the opening but lost all the gains by the close as Wall Street looked for signs of resolution to Europe’s debt crisis and for steps from the Federal Reserve to spur the economy. The Fed’s two-day policy meeting, concluding Wednesday, could have the central bank taking additional steps to bolster the economy. Many expect the Federal Open Market Committee to opt for a move known as Operation Twist, which would involve the central bank selling shorter-term notes and buying longer-term Treasury bonds in an effort to bend the yield curve.

Wall Street offered little reaction to a Commerce Department report that US housing starts fell 5% in August, illustrating a still troubled industry. Housing starts fell 5% to an annual rate of 571,000 last month, the lowest level in three months, according to Commerce Department data.

Meanwhile, the International Monetary Fund lowered its economic outlook for the US and Europe. The multilateral institution slashed the outlook for the US economic growth to 1.5% from 2.5% estimate in the June. The Fund also lowered economic growth estimate for the European Union of 17 nations to 1.6% from the previous estimate of 2%.

The Dow Jones industrial average gained 7.65 points, or 0.07 percent, to 11,408.70. The Standard and Poor's 500 closed lower by 2.00 points, or 0.17 percent, to 1,202.09, while the Nasdaq composite lost 22.59 points, or 0.86 percent, to 2,590.24.

Crude prices got a halt to their two days slide on Tuesday and moved higher by over a percent on optimism that US central bankers will soon announce steps to stimulate the US economy. The Federal Open Market Committee began a two-day meeting on Tuesday, and market observers are speculating another round of quantitative easing from it, though any decisions by the Fed would be announced after the meeting ends Wednesday afternoon.

The American Petroleum Institute reported late Tuesday afternoon that crude stocks rose by 2.574 million barrels for the week ended September 16. Crude-oil stockpiles were expected to have fallen by 900,000 barrels. Gasoline stocks posted a comparatively small increase of 0.062 million barrels and Distillate stocks rose 0.081 million barrels.

Benchmark crude for October delivery settled and expired, up $1.19, or 1.39%, at $86.89 a barrel on the New York Mercantile Exchange. The November contract settled up $1.11, or 1.3%, at $86.92. In London, November Brent crude contracts advanced by $1.40, or 1.28%, at $110.54 a barrel on the ICE.