Markets likely to take a breather after a big rally

The Indian markets surged in tandem with the global markets in the last session after the major central banks came up with a coordinated move to cut the cost of funds in money markets. Though, there was some profit booking in the last, but still the benchmark indices were able to garner gain of over 2 percent. Today, the mood is likely to be cautious and the indices are likely to make a flat-to-slightly soft start. The rate sensitive sectors are likely to maintain their cheer with the ease in weekly food inflation numbers to four months low. The wholesale price index for food articles rose 8% year-on-year, as against 9.01% in the previous week. Profit booking is likely to appear in the commodity and IT stocks after a big move in last session. Firms related with the Insurance business are likely to gain as the government on Thursday notified the final guidelines on initial public offerings (IPOs) by life insurance companies framed by Insurance Regulatory and Development Authority (Irda) and approved by the Securities and Exchange Board of India (Sebi) last month. On the same time the export oriented companies are likely to be in subdued mood as the Indian exports has registered a meagre 10.8% growth in October, lowest since October, 2009, when it contracted by 6.6 per cent.

The US markets after staging their best one day performance in last more than two years, consolidated on Thursday and made a mixed closing. Another rise in weekly jobless benefits claims outweighed stronger manufacturing report and investors turned cautious. The Asian markets have made a cautious start ahead of German Chancellor Angela Merkel’s speech to lawmakers on Europe’s debt crisis.

Back home, Indian stock markets commenced the final month of the year on an exhilarating note and the benchmarks even rallied beyond the psychological 5,000 (Nifty) and 16,700 (Sensex) levels in the early part of session on Thursday. Though, the benchmarks failed to capitalize on the initial momentum, nevertheless, the session turned out to be an exhilarating one as it saw the key gauges garner over two percentage points and snap the second consecutive session in the positive terrain. Sentiments remained buoyant right from the start of trade as investors welcomed the world's major central banks’ new strategy to keep Europe's debt crisis from choking off global lending, a dramatic step that comes as the availability of credit for businesses and consumers has shown signs of freezing up. Amid the ongoing global credit crunch and lingering Euro-zone woes, the six leading central banks including US, Canada, UK, Japan, Switzerland and Europe acted in concert by joining forces to lend dollars more cheaply to foreign banks. Moreover, reports that the central bank in China reduced the reserve requirement ratio of its banks by 50 bps to shore up activity in the world's second-largest economy, also encouraged marketmen. Earlier on Dalal Street, the benchmark got off to an exuberant opening and surged over three and half a percent in the initial moments of trade thanks to the wonderful tidings on the global front. However, the indices failed to capitalize on the smart opening and kept losing steam through the day’s trade. The frontline gauges kept hovering around the psychological 4,950 (Nifty) and 16,600 (Sensex) in the early noon trades however, the indices got dragged to the lowest levels in the session soon after the somber European market opening on the back of disappointing economic reports and ECB President Draghi's cautious comments. On the BSE sectoral space, the Metal sector kept shining brightly through the day and remained the top gainer in the space with over four percent gains followed by the rate sensitives like Banking and Realty counters which settled with over three and half a percent gains each. Defensive Healthcare pack remained only chink in the armor with moderate cuts while, some individual names like BHEL, Bharti Airtel and HUL bucked the optimistic trend and traded in the negative terrain. Finally, the BSE Sensex jumped 359.99 points or 2.23% to settle at 16,483.45, while the S&P CNX Nifty climbed by 104.80 points or 2.17% to close at 4,936.85.

The US markets made a mixed closing on Thursday, after the last sessions surge, as Wall Street turned wary before Friday’s November jobs report and after claims for unemployment benefits rose last week. New claims for unemployment benefits rose unexpectedly above the key 400,000 mark, according to data released by the US Labor Department.New claims for unemployment rose to 402,000 for the week ended November 26, an increase of 6,000 from the previous week's revised level of 396,000. However, US manufacturing expanded in November at the fastest pace in five months, buttressing other reports this week that signal the economy is picking up as 2011 comes to an end.

The Institute for Supply Management’s factory index climbed to 52.7 in November from 50.8 the month before. In Europe, a manufacturing gauge based on a survey of purchasing managers in the 17-nation euro region fell to 46.4 from 47.1 in October, London-based Markit Economics stated. This is the lowest since July 2009.

The Dow Jones industrial average lost 25.65 points, or 0.21 percent, to 12,020.00. The Standard and Poor’s 500 closed lower by 2.38 points, or 0.19 percent, to 1,244.58, while the Nasdaq composite gained 5.86 points, or 0.22 percent, to 2,626.20.

Crude prices fell on Thursday snapping their four days rally, despite a better than expected manufacturing data in the US. The signs of further economic slowdown in Europe and a weaker factory output data in China outweighed the good manufacturing numbers. Also The Labor Department reported that new applications for unemployment benefits rose for a second straight week, gaining 6,000 to 402,000 last week.

Benchmark crude for January delivery settled 16 cents lower at $100.20 a barrel after trading in a range of $99.78 to $101.17 on the New York Mercantile Exchange. In London, Brent crude oil for January settled $1.53 a barrel lower, at $108.99 a barrel on the ICE.