Markets to get a flat but positive start taking cues from stablising global markets

The Indian markets sank in last session, investors worried of global developments opted to book profits and despite some late hour recovery markets could not gather enough strength to return in green. Today, the start is likely to be flat-to-positive and the markets may stabilise after previous sessions drubbing as the other global markets have recovered. The marketmen may get some support with governments' hopes that despite recent moderation the Indian economy would grow at 9-10 percent in the medium-term as the fundamentals remain strong. India's economic growth slowed to 7.7 percent in the first quarter of 2011-12, the weakest growth in six quarters, due to a sharp drop in industrial production. The PSU oil marketing companies are likely to remain in limelight as the international crude prices have surged again and the oil marketing companies fear that they will not be able to meet the country's fuel demand after two and a half months unless the government raises fuel prices or immediately transfers cash to compensate them for losses.

Meanwhile, there will be lots of important result announcements to keep the markets buzzing. Bajaj Finserve, Biocon, Crompton Greaves, HDFC Bank, Mastek, Indraprastha Gas, Raymond and Torrent Power etc. will be announcing their numbers today.

The US markets after previous sessions plunge witnessed a good rebound on Tuesday on good banks earnings and report that France and Germany were engaged in “intensive talks” on bolstering the European Financial Stability Facility. The Asian markets, barring few have made a green start on optimism over progress in expanding Europe’s rescue fund. The Chinese market is slightly in somber mood on reports that foreign direct investment in country grew in September at the slowest pace in three months.

Back home, sentiments in the domestic markets once again showed signs of weakening as lack of significant upside triggers on the domestic front and discouraging developments from the global front continue to dissuade investors from Indian equities. Tuesday’s session was no exception as the benchmarks capitulated to the hefty selling pressure after a day of consolidation and got obliterated by over one and half percentage points to slip below the psychological 5,100 and 16,800 levels. The jittery market participants squared off hefty positions from the software and technology counters after bellwethers like HCL Tech and TCS announced earnings that were below street’s estimates and raised concern over future outlook. The profit booking in local markets intensified thereafter as the European markets got off to a discouraging opening and traded with cuts of around a percent. Sentiments got spooked after global rating agency Moody’s put France's AAA credit rating on negative watch and warned that it could slash the coveted rating in the coming three months if its budget stretches too much. Earlier on Dalal Street, the benchmark got off to a gap down beginning after investors largely remained influenced by gloomy global developments as Germany played down the idea of a quick fix for Europe’s problems while manufacturing activity stayed weak in the New York region. After the somber opening there was no turning back for the frontline indices as they lacked enthusiasm to tread to higher levels amid absolutely no supporting cues. Some recovery was evident from the session’s lowest point that the key indices hit in early noon trades however, that could not do enough to heal the nasty laceration that the markets suffered in the early part of the session. On the BSE sectoral space, not even a single index went home in the positive zone as investors took profits off the table across the counters. The IT and TECk pockets bore the maximum brunt of selling and got obliterated by over three percent while the rate sensitive packs like Realty, Bankex and Auto too witnessed hefty bouts of profit booking and nosedived. Meanwhile shares of airline companies like Kingfisher Airlines, SpiceJet and Jet Airways cruised against the tide and rallied in the range of 1-7% after Aviation Minister opined that the ministry is considering the recommendations of Department of Industrial Policy & Promotion (DIPP) to allow foreign carriers to pick up stake in domestic airlines. Finally, the BSE Sensex shaved off 276.80 points or 1.63% to settle at 16,748.29, while the S&P CNX Nifty plunged by 80.75 points or 1.58% to close at 5,037.50.

The US markets rallied on Tuesday, after France and Germany reached an agreement to bolster the euro area’s rescue fund. European Union diplomats stated that France and Germany had come to terms on an accord to boost the European Financial Stability Facility to 2 trillion euros ($2.47 trillion) as part of a comprehensive plan that should be endorsed at a weekend summit. In US, ahead of the opening bell, the National Association of Home Builders reported its index of builder sentiment climbed to 18 in October from 14, indicating less pessimism about the embattled housing market.

Also according to data from the Labor Department, US wholesale prices rose more than expected in September, with the producer price index up 0.8% after an unchanged reading a month ago. Besides, Bank of America reported better than expected earnings and Goldman Sachs lost money in the quarter as estimated. IBM’s quarterly revenues were lower than expected.

The Dow Jones industrial average gained 180.05 points, or 1.58 percent, to 11,577.00.The Standard and Poor’s 500 closed higher by 24.52 points, or 2.04 percent, to 1,225.38, while the Nasdaq composite gained 42.51 points, or 1.63 percent, to 2,657.43.

Crude prices made a good rebound on Tuesday and surged by over 2 percent as equity markets moved higher on bank earnings, overshadowing slower Chinese growth and Europe's debt troubles. Oil prices fell early in the day after China said its surging economy cooled slightly in the last quarter. But prices rebounded by midday, following a broad rally on Wall Street.

Meanwhile, Libyan rebels strengthened their control of the country, raising expectations that Libya soon will be able to supply oil to world markets again. A return of Libyan exports would lower oil prices as supplies increase.

Benchmark crude for November delivery settled at $88.34 a barrel, gaining $1.96, or 2.27 percent, after trading in a range between $85.55 and $88.61 on the New York Mercantile Exchange. In London, Brent crude for December delivery settled at $111.15, rising 99 cents, or 0.9 percent on the ICE.