Markets to get a big gap-up opening in tandem with global markets

The Indian markets moved northward in late hours in last session, pre-empting a rally in global markets and after a volatile session the benchmark indices were able to garner gain of over half a percent. Today, the journey is likely to extend with a big gap-up opening, tailing global markets. All the sectoral gauges are likely to move higher with commodities, IT and technology taking the center stage. Banking stocks too are likely to remain in good fervor. However, the domestic cues are not that good and might impact the markets once the global euphoria ends. Eight core sector industries grew at 0.1 per cent in October, the lowest in five years, against 7.2 per cent registered during the corresponding period last year. In September, it had stood at 2.3 per cent. While, the fiscal deficit indicating a wobbly financial condition of the government has breached 74 per cent of the total year’s target during the first seven months of the current financial year. Fiscal deficit crossed Rs 3.07 lakh crore during the April-October period, as against the Budget target of Rs 4.12 lakh crore in 2011-12.The PSU oil marketing companies too will remain in limelight as the 3 major OMC’s have decided to revise petrol prices downwards by Rs 0.65 / litre (excluding state levies) with effect from December 1, 2011.

The US markets surged on Wednesday along with other global markets as the European crisis seemed easing after a group of major central banks undertook collective action to make dollar funding cheaper for European banks.Federal Reserve said that it was joining other major central banks in injecting more money into the global financial system. The Asian markets too have made a jubilant start in tandem with the US and European markets, also there is some supporting news from the region, China’s central bank has cut the reserve requirement ratio for its commercial lenders for the first time in nearly three years to ease credit strains and ramp up economy.

Back home, the Indian markets despite a volatile session were able to post good gain at the end after a day of decline. Though, the start of the trade was on a somber note, tracking the mixed global cues and apprehension about the local economic growth. There was mood of cautiousness in the beginning ahead of the September quarter GDP numbers, though the street was expecting a weaker number but apprehension were rife as after the 13 successive hikes by the Reserve Bank of India the industrial growth had slowed considerably. In the global markets the trade remained sluggish after the Standard & Poor’s cut credit ratings on US lenders from Bank of America Corp. to Goldman Sachs Group Inc. On the local front the marketmen took encouragement with inline GDP numbers, which though came at a more than two year low on quarterly basis but was more or less as expected. India's Gross domestic product (GDP) growth has came at 6.9% in the second quarter ended September, compared with 8.9% a year ago in the same quarter and its lowest in last nine quarters. Earlier the trade at Dalal Street started on a somber note and it looked like the consolidation mood will continue with intermittent profit booking. The benchmarks lost their crucial levels in opening trade and drifted lower. On the sectoral front Oil& Gas emerged as the top gainer closely followed by FMCG and technology sector, while Consumer Durables and the realty remained the laggards since beginning and could not recover till last. The broader markets too underperformed and the BSE Midcap and Smallcap indices both lost over half a percent. The retail stocks too were in dull mood as the logjam in parliament continued over government’s approval for 51% FDI, however they got a spurt after Prime Minister Manmohan Singh said that the government would not roll back the decision. The markets started moving higher in the noon trade after the storm of weak GDP numbers stabilized and later the European markets too recovered from a soft start. Finally, the BSE Sensex gained 115.12 points or 0.72% to settle at 16,123.46, while the S&P CNX Nifty added 26.95 points or 0.56% to close 4,832.05.

The US markets surged on Wednesday, with the Dow industrials chalking up their best day in more than two and half years, as the Federal Reserve and five other central banks moved to help banks hit by Europe’s debt crisis. The Federal Reserve and the central banks of the euro area, Canada, the UK, Japan and Switzerland agreed to reduce the cost of offering dollar financing through swap arrangements.Central banks from the leading developed economies said they will take coordinated steps to prevent a lack of liquidity in the global financial system. Investors perceived that the central banks are sending a message that they’ve identified the problem and they are working together. Such coordination could prevent a replay of the US financial systems near meltdown in 2008-2009. The market celebration was supported by the ADP employment report which found an increase of 206,000 jobs in November, the biggest jump since last December. The ADP just indicates that the economy is on somewhat firm ground.

Besides, in its Beige Book survey released, the Fed stated that the US economy expanded at a moderate pace in all but one of its 12 districts, led by gains in manufacturing and consumer spending. In the US, companies boosted payrolls in November by the most this year and US businesses expanded at the fastest pace in seven months. Another report showed the biggest gain in home- purchase contract signings in a year.

The Dow Jones industrial average gained 490.05 points, or 4.24 percent, to 12,045.70. The Standard and Poor’s 500 closed higher by 51.77 points, or 4.33 percent, to 1,246.96, while the Nasdaq composite gained 104.83 points, or 4.17 percent, to 2,620.43.

Crude prices moved higher on Wednesday supported by move of the top central banks to prevent a global liquidity crunch. Though, initially the prices were lower in choppy trading after a government report showed crude and distillate stocks rose sharply and gasoline stocks likewise increased though less than expected, last week.

The Energy Information Administration reported that crude-oil stocks rose 3.932 million barrels in the week ended November 25 as refiners slowed processing rates and boosted imports. Gasoline stocks rose 213,000 barrels, less than the expected

Benchmark crude for January delivery settled at $100.36 a barrel, gaining 57 cents, or 0.57 percent on the New York Mercantile Exchange. In London, January Brent crude slipped 30 cents to settle at $110.52 a barrel on the ICE.