Markets likely to get a positive start on European development

The Indian markets suffered sharp cuts on Friday and the benchmark indices lost over one and half percent, though there was cautiousness ahead of the EU summit's final outcome but the trade remained jittery due to the domestic developments and marketmen opted to take profit fearing a slow growth of economy pulling the markets to further low. Today, the start is likely to be in green as the other global markets are giving positive cues. However, the trade is likely to remain cautious ahead of the announcement of IIP data for October. Street is expecting contraction in October, its first decline in over two years. The industrial sector is reeling under stress for the past few months, feeling the pinch of rising interest rates, input costs and persistently high inflation. However, some cheers can be seen on the airline stocks as it has been reported that Civil Aviation Ministry has softened its stance, agreeing to industry ministry’s proposal of allowing foreign carriers to pick a strategic 26 per cent stake in domestic airlines. The markets will also be watching the political development as Parliament reconvenes today, after Anna Hazare’s day-long token fast on Sunday. The Cabinet will review the Lokpal Bill on Tuesday and the Congress party will seek the opinions of its key allies, before meeting with all parties on Wednesday.

The US markets rallied on the last trading day of the week and the major indices were able to gain for second straight week. The positive development in Europe and the report of rise in consumer confidence took the market higher. The Asian markets have mostly started in green, European leaders agreeing for a tighter budget rules and expanding a bailout fund has boosted the investors’ morale. Only the Chinese market is trading marginally in red.

Indian stock markets witnessed yet another session of mayhem on the last trading day of the week as the benchmark indices got butchered by over one and half a percentage points on a day when all the European counterparts exhibited optimistic trends. The benchmark indices showed some signs of recovery in mid-noon trading session but  the hefty across the board selling in dying moments dragged them around the important psychological 4,850 (Nifty) and 16,200 (Sensex) bastions. Investors globally remained worried after reports of disagreement at the European Union summit as it failed to give any indications to prop up the morale of markets across the globe. The European Central Bank slashed interest rates for the second time in a little more than a month, signaling that it wants to help slowing economies but poured cold water on hopes that it would step up bond purchase. Meanwhile, investors also overlooked the reports that despite the ongoing debt crisis in Euro-zone and economic slowdown in US, India’s exports surged to $22.3 billion in November while import in November 2011 stood at $35.9 billion,  narrowing trade deficit to $13.6 billion compared to $19.6 billion in last month. Also, domestic car sales registered a growth of 7% in November, after seeing negative sales growth for four consecutive months. Earlier on Dalal Street, the benchmark got off to a gap-down beginning tracking the somberness prevailing in Asian markets as investors chose to take profits off the table amid discouraging developments from the European front. After trading on a weak note in early trades, the indices showed some signs of recovery but it was short lived as hefty position squaring battered the key gauges to their lowest levels in early afternoon session. However, optimistic European market opening spurred some optimism in local bourses as investors started to cover the short positions to take the indices to intraday highs in mid noon trades. But bears had the last say as they stalled the resurgence of the benchmarks amid volatile trades, leading the indices to close around the day’s lows. On the BSE sectoral space, the Capital Goods counter continued to bear the maximum brunt and nosedived by around two and half a percent, being the top laggard in the space followed by the rate sesnsitive Auto pocket that sank over two percent. Finally, the BSE Sensex plummeted by 274.78 points or 1.67% to settle at 16,213.46, while the S&P CNX Nifty shaved off 76.95 points or 1.56% to close at 4,866.70.