The Indian markets suffered sharp decline in previous session, the global cues weighed on the sentiments though there was a credit policy announcement too and the RBI on expected lines announced 25 basis point hike in key policy rates but the investors concentrated mainly on the global cues. Today the start is likely to be good as the global cues are indicating for a positive start. Rate sensitive too may stabilize as the rate hike was already discounted. Domestic pharma companies are likely to get a boost with the decision of National Pharmaceutical Pricing Authority (NPPA) increasing prices of 62 drugs, which are mainly based on indigenously manufactured insulin. The majority of the drugs, whose prices have been increased, are used in treatment of diabetes and tuberclosis. The companies which would be affected by the price revision of drugs include Eli Lilly, Pfizer, Novartis, Sanofi Aventis, GSK, Biocon, Wockhardt, Lupin and Cipla. NPPA said that raw material cost and revision in the norms of conversion cost, packing charges and packaging materials as notified on December 16, 2010 necessitated the move.
However the rising international crude prices are likely to put pressure on the local PSU oil marketing companies and the markets too. The conflict in Libya and diplomatic efforts to forge a response has once again raised the crude prices.
The US markets made a good pullback effort on Thursday and all the major indices gained by 1-1.5 percent, it was the slew of good economic reports that helped the markets recover from steep fall of last two session and to put aside the fear of Japanese crisis. The Asian markets have made a good start and most of the indices are trading higher with Japanese Nikkei gaining around 2 percent as G7 industrial nations agreed on Friday to jointly intervene in the currency market to stem a sharp yen rise.
Back home, stock markets in India carried forward this week’s trend of closing in the negative territory after every positive close as they settled in the red after taking cuts of around a percent a day after garnering about a percentage points. Although RBI’s eighth hike in benchmark interest rates since March 2010 by 25 basis points was in line with market expectations, sentiments however went awry as marketmen feared that escalating domestic inflation would eat in to the overall growth of Indian economy. The RBI also hiked the forecast of inflation for the current fiscal year to around 8% from its previous estimate of 7% as it expected that economic growth will be impacted from surging global commodity prices, especially crude oil prices. While weakness in the Asian markets amid concerns of aggravating nuclear crisis in Japan too undermined local sentiments. The jump of around one and half a percent in crude oil prices also took sheen off the local bourses as traders shrugged the optimistic cues from the European counterparts. Meanwhile, marginal decline in food inflation to a three-and-a-half-month low of 9.42% for the week ended March 5 failed to enthuse the investor sentiment. The NSE’s 50-share broadly followed index Nifty, managed to hold on to the crucial 5,450 support level while Bombay Stock Exchange’s Sensitive Index, Sensex closed with a two hundred point cut around the psychological 18,150 mark. The broader markets traded with some resilience and finished with moderate losses thereby outperforming their larger peers by quite a margin. Earlier on Dalal Street, the benchmark got off to a gap down start as investors squared off positions tracking discouraging leads from the overnight US markets coupled with renewed fears that a partial meltdown may have occurred at a nuclear plant in Japan which undermined sentiments significantly. The markets gained some traction from thereon till the reports of marginal fall in inflation and hike in key policy rates hit the street. Thereafter, investors opted to take profits off the table from rate sensitive sectors like Banks, Auto and Realty as RBI’s raising of March-end inflation estimate to 8% from 7% projected earlier, had an adverse impact on the domestic sentiments. The bourses after touching intraday lows in the dying hours pared some portion of decline to eventually settle with losses of over a percent. Finally, the BSE Sensex plunged by 208.82 points or 1.14% to settle at 18149.87 while the S&P CNX Nifty fell by 64.50 points or 1.17% to end at 5,446.65.
The US markets pulled back and closed higher on Thursday on the back of good economic reports helping investors put aside fears over Japan’s nuclear crisis. The Labor Department reported that the number of people applying for unemployment benefits fell more than economists expected last week. Ongoing claims dropped to the lowest level since October 2008. In other economic reports, the survey from the Federal Reserve's Philadelphia branch showed new orders soared, while a gauge of manufacturing in the mid-Atlantic region jumped in February to the highest point since January 1984.
The Labor Department in separate report showed consumer prices edged higher in February. The Consumer Price Index rose 0.5 percent last month. Core prices, which exclude food and fuel costs, edged higher by 0.2 percent, the same as the previous month.
Dow Jones Industrial Average gained 161.29 points, or 1.39 percent, to 11,774.59. The Standard & Poor's 500 rose 16.84 points, or 1.34 percent, at 1,273.72, while the Nasdaq rose by 19.23 points, or 0.73 percent, at 2,636.05.
Crude prices surged on Thursday by about 4 percent edging back above $100 a barrel mark on escalating tensions between Libya and governments working on a response at the United Nations and on continuing unrest in the Middle East and Bahrain that kept investors worried about potential supply disruptions. The trading volume remained low and the expiration of the April contract added some volatility to the prices.
The United Nations Security Council authorized military strikes on Libya, and US and European officials said last night that air attacks against Col. Moammar Gadhafi's forces were possible 'within hours'.
Benchmark crude for April rose $3.40 to expire at $101.38 a barrel, after trading in a range from $96.60 to $101.99 on the New York Mercantile Exchange. In London, ICE Brent crude for May rose $4.30, or 3.89 percent, to settle at $114.90 a barrel on the ICE.
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