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Friday, March 25, 2011

Domestic markets may extend the rally mood with positive start


The Indian markets despite a dull day of trade were able to garner gain of about a percent in previous session, not only the blue chips but the broader markets too participated equally in the rally. All the rate sensitive’s gained despite the inflation returning into double digit, food price index rose 10.02% on annual basis during week-ended March 12, as compared with 9.42% recorded in the previous week. Today the start is likely to be good on sanguine global cues; also the Finance Minister Pranab Mukherjee has said that it would be possible to maintain inflation at a moderate level on account of measures taken by the government. He further said the Centre and the states have to work collectively to remove supply bottlenecks, a move to tame inflation. Meanwhile, India is expected to see 5.4 per cent growth in the farm sector in the current fiscal 2010-11. In the Annual Report of the Department of Agriculture and Cooperation under Ministry of Agriculture, the department has expressed satisfaction over the growth of investment and capital formation in agriculture in the recent past. However, the PSU oil marketing companies are not likely to get any respite soon, as the international crude prices are continuing to remain at elevated levels while it has been reported that the government has no plans to raise petrol and diesel prices until the completion of elections in some states.
The US markets added strength on Thursday supported by strong corporate earnings and fall in jobless claims data indicating the labor market is healing and employers may be stepping up hiring. Most of the Asian markets have made a good start with Japanese leading the pack as construction firms gained on optimism that demand will grow as Japan rebuilds after its worst earthquake.
Back home, it turned out to be a stable day for the Indian benchmarks which sustained sanguinity for the third successive session and climbed well over half a percent point and managed to get the better of the crucial support levels. Optimistic cues from across the globe underpinned the investors’ conviction locally as they overlooked the worrisome food inflation numbers which increased for the second consecutive week ended March 12. After early weakness, the crude oil prices bounced back due to rising fears over supply disruptions as Gaddafi denied surrendering to Western forces in any circumstances and data showing US gasoline stocks fell more than expected in the week to March 18. While marketmen remained of the belief that spiraling oil prices and towering inflation numbers are going to make it difficult for an emerging market like India to log higher than expected growth regardless of scoring higher on the GDP scale. The decline in index heavyweight Reliance which shaved off around a quarter percent point was off-set by the upsurge in rate-sensitive counters. The NSE’s 50-share broadly followed index Nifty, which traded below 5,400 levels three sessions ago, ricocheted above the crucial 5,500 support level while Bombay Stock Exchange’s Sensitive Index, Sensex garnered close to one hundred fifty points and regained the psychological 18,350 mark. The broader markets too traded on healthy note and performed in tandem with their larger peers. Earlier on Dalal Street, the benchmark got off to a gap up start as leads from the global front underpinned regional sentiments. Optimistic close on Wall Street, in-line growth in New Zealand’s Q4 GDP numbers, and the marginal wilt in crude oil prices filliped investors’ mood as they overlooked the weakness in Japanese markets which fell on worries over parts shortage and production halt. The frontline indices traded in a narrow band through the day’s trade led by gains in realty and auto stocks. The fifty stock nifty slipped below the crucial 5,500 level in the early moments of second half but recovered immediately to eventually settle around the high point of the day because of sustained buying interests across the board. Finally, the BSE Sensex surged by 144.58 points or 0.79% to settle at 18,350.74 while the S&P CNX Nifty climbed 42.15 points or 0.77% to end at 5,522.40.
The US markets went for a smart rally on Thursday on the back of confident corporate earnings and signs of a stronger job market. Earnings growth has been strong across US companies and Software company Red Hat Inc., chip maker Micron Technology Inc. and Chef Boyardee maker ConAgra Foods Inc. all reported profits that beat expectations. There was good news from the jobs market too; government said fewer people applied for unemployment benefits last week.
The Labor Department reported that the number of people seeking benefits dropped 5,000 to a seasonally adjusted 382,000 in the week ended March 19, the fourth drop in the past five weeks. The four-week average, a less volatile measure, fell to 385,250, the lowest since July 2008. However, in a disappointment the Commerce Department separately released February durable goods orders data, which showed companies trimmed their orders for long-lasting manufactured goods, signaling business investment falling for a second month.
The Dow Jones industrial average gained 84.54 points, or 0.70 percent, to close at 12,170.56. The Standard & Poor's 500 index rose by 12.12 points, or 0.93 percent, to 1,309.66, while the Nasdaq composite index closed higher by 38.12 points, or 1.41 percent, to 2,736.42.
Crude prices edged up on Thursday in a choppy trading as Middle East unrest and the Libya conflict raised concerns about supply disruption supporting the prices, while euro zone debt problems weighed on Brent prices. Though, Portugal is unlikely to ask the European Union for a financial bailout during an EU leaders' summit, but it cannot be ruled out. There were mixed economic reports, the durable goods report offset a report showing US initial jobless claims fell.
Benchmark crude for May rose 22 cents or 0.2 percent to $105.97 a barrel, after trading from $105.11 to $106.69 on the New York Mercantile Exchange. In London, Brent crude for May rose 17 cents to settle at $115.72 a barrel on the ICE.

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