Markets likely to make a weak start of the penultimate day of F&O expiry

The Indian markets saw some light in last session and closed in green after eight continuous sessions of decline. Though, the mood remained cautious and the traders took all chances to book profit, but it was the short covering that helped the markets to some extent. Today, the start is likely to be soft as the global markets are showing sluggish trend. Rupee has been continuously depreciating against the dollar and its further movement will be watched as companies who have raised funds from overseas sources will find it difficult to service their debt. However, there is good news for the sugar sector and that may see some spurt today as government has allowed export of a million tonnes of sugar for the 2011-2012 crop marketing year that started in October and also lifted the stock holding limit on the sweetener from November 30. The airline stocks too may be buzzing today as the Department of Industrial Policy and Promotion has moved a Cabinet note, proposing 26 per cent foreign direct investment in domestic airlines. The move comes at a time when several domestic airlines are in complete financial mess and struggling to maintain their day-to-day operations. Also ONGC has withdrawn documents it had filed for a share sale in the firm, though the move was termed technical as the document filed in September had a validity of 90 days, but it came as a blow to the government's efforts to raise Rs 40,000 crore through disinvestment.

There will be some important result announcements too, to keep the markets buzzing. Bajaj Hindusthan, BF Utilities, GTL Infra and United Breweries will come up with their September quarter numbers today.

The US markets continued their decline on Tuesday on concern of weakening domestic economy and deepening European debt crisis. US government lowered its estimate of economic growth in the third quarter while borrowing cost in Spain increased, renewing worries about the debt crisis. The Asian markets have made a weak start and most of the indices are trading with cut of around 1-2 percent, the weakness in US economy was weighing on the sentiments.

Back home, the eight back to back sessions of horrendous performance finally came to a halt, two days ahead of the November series futures and options expiry as hefty covering of short positions helped Indian benchmarks to regain the important psychological 16,000 (Sensex) and 4,800 (Nifty) bastions. A relief rally was long due for the markets however, Tuesday’s gains for benchmark indices was merely a glimpse of a pullback rally considering the fact that the key gauges have lost over a massive nine percentage points in the eight session downtrend. Nonetheless, the bourses showed some fervor in the session and garnered around three fourth of a percent as market participants hunted for badly beaten down but fundamentally strong bargains. But the gains in the domestic markets were limited by the sustained depreciation in rupee which slipped to lifetime lows against the US dollar, making it the worst performing currency in Asia. Earlier on Dalal Street, the benchmark got off to an optimistic opening, in tandem with largely positive sentiments prevailing Asian markets. Though the indices soon slipped to the lowest levels in the session, however, hefty short covering in software and technology counters lent support to the indices. Thereafter, the bourses capitalized on the momentum and treaded on a northbound journey and even touched the high point of the day in mid noon trades. But just when it looked like the bourses will snap the eight day mayhem with strong gains, investors started to take profits off the table and brought the key gauges to the lower levels just before the end of trade. Moreover, the broader markets failed to match the fervor that their larger peers showed and settled with marginal gains. On the BSE sectoral space, the hefty short covering was evident in Information Technology index which remained the top gainer in the space with about two percent gains. The Metal and rate sensitive Auto pockets too went home with gains of over a percent. Finally, the BSE Sensex gained 119.32 points or 0.75% to settle at 16,065.42, while the S&P CNX Nifty rose by 34.00 points or 0.71% to close 4,812.35.

The US markets edged lower on Tuesday, as further turmoil in Italian and Spanish markets heightened investor anxiety about the global economic picture. Also, investors are worried about prospects for domestic economic collateral damage as economy grew less than estimated. The Commerce Department stated that the US economy grew at a 2% pace in the third quarter, down from an annualized pace of 2.5% previously estimated. The markets came off their lows and even dabbled briefly in positive territory after the International Monetary Fund offered a new credit to address contagion risks and Federal Reserve minutes showed that some officials favor a further easing of monetary policy. The International Monetary Fund offered two new lending facilities to troubled nations with fewer conditions attached.

Besides, the Fed minutes of meetings revealed that policy makers discussed various options in how to push more liquidity to the economy and debated merits and pitfalls of each action. A few members indicated that they believed the economic outlook might warrant additional policy accommodation, the central bank stated in the minutes released.

Earlier the Super Committee of 12-member panel of House and Senate members failed to agree on a plan to cut at least $1.2 trillion from the US deficit over 10 years. President Barack Obama expressed disappointment with the outcome, but vowed to veto any attempt to undo the automatic spending cuts.

The Dow Jones industrial average lost 53.59 points, or 0.46 percent, to 11,493.70. The Standard and Poor’s 500 closed lower by 4.94 points, or 0.41 percent, to 1,188.04, while the Nasdaq composite lost 1.86 points, or 0.07 percent, to 2,521.28.

Crude price moved higher on Tuesday putting a halt to its three days losing streak as sanctions against Iran raised fears of regional instability. Also there was some support with the euro gaining against the dollar, after the International Monetary Fund said it would open more lending schemes to aid countries with sound policies but faced risk due to the euro debt crisis. However, the prices weakened in early trade after a data showed that the US economy grew less than estimated in the third quarter at 2.0 percent, from 2.5 percent.

Meanwhile, Iraq's oil minister has indicated that OPEC may decide to cut oil output at its December 14 meeting in Vienna as global oil demand is expected to decline next year.

Benchmark crude for January delivery settled at $98.01 a barrel, gaining $1.09 or 1.12 percent, after trading in a range from $96.55 to $98.70 on the New York Mercantile Exchange. In London, January Brent crude settled at $109.03 a barrel, up $2.15, or 2.01 percent on the ICE.