Markets likely to make a flat-to-cautious start

The Indian markets continued their bull run for the fifth straight day in previous trading despite weak global cues. While most of the sectoral gauges moved higher, the benchmarks added another more than half a percent. Today the start is likely to be cautious-to-flat for the markets and some consolidation may appear after a series of rally while some sectors may witness profit booking too. The F&O series expiry week is likely to bring volatility. Some of India’s leading industrialists like Ratan Tata and Anil Ambani will appear next week before Parliament’s Public Accounts Committee in the alleged 2G spectrum scam. Meanwhile, the Telecom Ministry will be taking a final decision on 2G spectrum pricing and on those holding airwaves beyond contracted limit of 6.2 Mhz, based on recommendations of TRAI, within next three months before seeking Telecom Commission’s approval.

The finance ministry has said that the draft guidelines for giving new banking licences would be announced by the Reserve Bank of India in the next few days. In Budget 2011-12, finance minister Pranab Mukherjee had said that the RBI plans to issue guidelines for the grant of new banking licences before the close of this financial year.

The US markets snapped the gaining streak on Monday on concerns of Japan’s nuclear crisis and violence in the Middle East and North Africa though, there were good economic reports but investors opted to remain sideways. The Asian markets have made a mixed start with Japanese Nikkei suffering on reports that most of the companies will not be able to report the financials on time while the dividend declaration too may be delayed.

Back home, stock markets in India extended the uptrend on the first day of the F&O expiry week, after vivaciously rallying over two percent on Friday, and managed to finish a choppy session of trade on an optimistic note as the joy of closing in the positive territory got quintupled. The benchmarks displayed resilience as they traded firmly in the green for most part of the day’s trade on the back of heavy buying in rate sensitive counters like Auto and Baking and managed to touch two month high levels. Investors traded with some conviction as growth concerns over Europe weighed on crude oil prices. However, the frontline indices met with stern resistance at the psychological levels of 5,700 and 19,000 as investors took profits off the table around those levels after reports of fierce retaliation between Western forces and forces loyal to Col Gaddafi emerged. The bourses climbed over half a percent in the session despite tepid leads from markets across the globe as investors speculated most of the headwinds have been factored in by the markets and that the companies will report strong quarterly earnings for the fourth quarter. Meanwhile, local sentiments also took cues from CII Survey which opined that the ongoing high inflation and resulting rapid increase in costs has so far been unable to significantly dent the performance of India Inc. Earlier on Dalal Street, the benchmark got off to a soft start as fresh worries over high levels of radiation in Japan emerged which delayed efforts to stabilize a crippled nuclear power plant and shoddier than expected earnings reported by some blue chips companies weighed on cautious investor mood. After hitting intraday lows in the early hours, the frontline indices rose to higher levels on the back of buying in blue chips and fertilizer stocks. However, the session largely remained characterized by choppiness as investors seemed reluctant to pile up hefty positions after the recent over five percent rally. On the sectoral front, rate sensitive Auto pocket surged by 1.52% led by heavyweight Tata Motors which zoomed over 3%, being the top gainer on Sensex while stocks like Maruti Suzuki and Cummins India too gained around 1.50% each. The Capital Goods index too remained amid the thick of things. Finally, the BSE Sensex surged by 127.50 points or 0.68% to settle at 18,943.14 while the S&P CNX Nifty climbed 33.00 points or 0.58% to end at 5,687.25.

US markets closed modestly lower on Monday despite some good economic reports as traders showed concern over Japan's nuclear crisis and violence in the Middle East and North Africa. Oil prices eased a bit as rebels in Libya, gained ground against Moammar Gadhafi with the help of international airstrikes against Gadhafi’s forces. On the domestic front, the Commerce Department said that consumer spending rose at its fastest pace in four months in February, though some of the increase was driven by higher gas prices.

On the same time, the National Association of Realtors said more Americans signed contracts to buy homes in February than economists were expecting. Sales rose in every region but the Northeast, but remained below what is considered a healthy level. Sales agreements for homes unexpectedly rose 2.1 percent last month to a reading of 90.8. Signings were 19.6 percent above June's index reading, the low point since the housing bust.

The Dow Jones industrial average lost 22.71 points, or 0.19 percent, to 12,197.88. The broader S&P 500 index dipped by 3.61 points, or 0.27 percent, to 1,310.19, while the Nasdaq composite declined by 12.38 points, or 0.45 percent, to 2,730.68.

Crude prices fell on Monday on report of Libya's rebels successes against forces loyal to Muammar Gaddafi. Qatar became the first Arab country to recognize Libya’s rebels as the people's sole legitimate representative, a day after a senior Libyan rebel official said Qatar had agreed to market crude oil produced from east Libyan fields no longer under the control of leader Muammar Gaddafi. However the dollar grew stronger which can pressure oil prices by making dollar-denominated commodities more expensive.

Benchmark crude for May delivery fell $1.78, or 1.7 percent, to $103.62 a barrel, after trading in a range of $103.60 to $105.76 on the New York Mercantile Exchange. In London, Brent crude futures for May delivery settled down 79 cents at $114.80 a barrel on the ICE.