Markets likely to remain in enthusiastic mood; benchmarks to get a slightly positive start

The Indian markets rallied in last session taking cues from the probable positive outcome of the German vote and the benchmark indices gained around one and half a percent. Rate sensitive’s surged undeterred by a rise in weekly inflation numbers, while the IT pack remained in jubilant mood over strength in dollar against rupee. Today, the start of new series is likely to be on a slightly positive note and the markets may remain enthusiastic. There will be some jitters in the metal and mining sector as a mining Bill, mandating miners to compulsorily share their profits and creating a regulator to monitor the sector’s overall growth would be put up before the Cabinet today. Also the rate sensitive may come under pressure as one of the deputy governor of the central bank has said that India's monetary policy makers are prepared to sacrifice some economic growth in order to control inflation and inflation expectations. Also the the ADA companies are likely to remain under pressure as the CBI has informed the Supreme Court that it is probing the alleged involvement of Anil Ambani in the 2G scam. In the chargesheet filed in the special court, the agency said the Reliance Telecom (RTL) used Swan Telecom, an ineligible firm, as its front company to get licenses and the costly radio waves. While, the primary markets will be buzzing with book building of simultaneously five companies.

The US markets made a mixed closing after a volatile day of trade on Thursday, though the global and domestic cues remained good and investors cheered the report of decline in jobless claims with optimism that Europe is taking steps to tackle its debt crisis. Though there was some cautiousness too and the tech heavy Nasdaq closed lower by half a percent owing to sell-off in US listed Chinese stocks on news of a probe into accounting practices. The Asian markets have made a mixed start, some of the Chinese IT stocks were down as US Department of Justice is reviewing allegations of accounting fraud at firms operating out of the Asian nation.

Back home, the September series futures and options expiry session turned out to be a action-packed event for the domestic frontline indices as they staged a smart intraday come-back and even went ahead to recapture the psychological 5,000 levels for the Nifty while the Sensex settled near to 16,700 levels. Investors remained optimistic as Germany’s parliament was expected to approve a proposal to increase the scope and size of the European Financial Stability Facility (EFSF), offering some relief from concerns that deep political divisions are hampering efforts to end the region’s debt crisis. Germany's approval of an enhanced rescue fund could go a long way to shore up Europe's defenses against a crisis that has already seen three countries bailed out and stoked talk that Greece will default. Local market participants lacked conviction to cover their shorts in the morning session of trade as disappointing weekly inflation reading weighed on sentiments. India’s food and fuel inflation jumped to 9.13% and 14.69% for the week ended September 17 from 8.84% and 13.69% in the previous week, respectively. The inflation continues to remain stubborn, indicating high inflationary pressures on the economy which may prompt the RBI to extend its aggressive monetary tightening measures. Earlier on the Dalal Street, the benchmark got off to a negative opening as the indices drifted below the psychological 4,950 and 16,400 levels in the early moments of trade since investors largely remained influenced by the cautiously pessimistic sentiments prevailing in Asian markets. After trading with moderate cuts through the morning session, the key indices gradually crawled into the green territory. Short covering intensified in late hours of trade which stoked the bourses to the highest point in the session. Finally some profit booking in the dying moments of trade led the bourses snap the session just below the session’s highs. The NSE’s 50-share broadly followed index Nifty, shut shop after surging over one and half a percent and regained the crucial 5,000 support level while Bombay Stock Exchange’s Sensitive Index, or Sensex accumulated over two hundred fifty points to close a tad below the psychological 16,700 mark. The broader markets failed to show any kind of fervor and settled on an uninspiring note, underperforming their larger peers by a fat margin. On the F&O front, the September series expired on a heartening note as the benchmarks garnered over three and half a percent gains, a month after registering the worst series performance since October 2008. Finally, the BSE Sensex surged 252.02 points or 1.53% to settle at 16,698.07, while the S&P CNX Nifty soared by 69.55 points or 1.41% to close at 5,015.45.

The US markets ended a choppy on a mixed note on Thursday. Better US economic data and Germany’s vote to expand its rescue fund bolstered sentiment. The market started the day sharply higher after German lawmakers voted to expand the European rescue fund. The market enthusiasm was boosted after German lawmakers overwhelmingly passed the proposal to expand the European bailout fund. What reassured markets was the level of support Chancellor Angela Merkel and her party received from the opposition members. The German vote will allow the nation to increase its participation in the European Financial Stability Facility to €211 billion from €123 billion and expand the rescue fund to provide emergency loans to troubled nations.

Also, data showed jobless claims fell to a five-month low and the government hiked its estimate of the nation’s economic growth for the second quarter. US economy grew at a 1.3 percent pace in the second quarter, faster than previously estimated, and applications for jobless benefits dropped by a more-than- forecast 37,000 to 391,000, the fewest since April, according to government data. Fed Chairman Ben S. Bernanke in a speech highlighted the nation’s high unemployment rate and stated it required attention from the White House and Congress.

The Dow Jones industrial average gained 143.08 points, or 1.30 percent, to 11,154.00. The Standard and Poor's 500 closed higher by 9.34 points, or 0.81 percent, to 1,160.40, while the Nasdaq composite lost 10.82 points, or 0.43 percent, to 2,480.76.

Crude prices returned to their upbeat mood and ended higher by more than 1 percent on Thursday as Germany's parliament on Thursday approved an expansion of a euro-zone crisis fund, which helped dispel some concerns about Europe, while the domestic US economic news too were good and jobless claims dropped sharply in the latest week. Also the government reported that economic growth expanded at a slightly faster pace than previously estimated.

Meanwhile, it was reported that OPEC oil output is expected to rise to 30.25 million bpd this month to hit its highest since October 2008, due to higher supplies from Iraq, Angola and resumption of supply from Libya.

Benchmark crude for November delivery settled at $82.14 a barrel, up by 93 cents, or 1.15 percent, after trading between a range of $79.64 and $83.98 on the New York Mercantile Exchange. In London, Brent crude for November delivery closed at $103.95, edging up 14 cents on the ICE.