Markets to get a gap up start on jubilant global cues

The Indian markets surged on Tuesday however showed cautiousness in the short muhurat trading session on Wednesday. All eyes were on development in Europe and traders opted to play safe. Today, the start is likely to be good on supportive global cues and the benchmarks may get a gap-up start. The commodity stocks will be surging high with expectation of demand recovery. However, the rate sensitive may remain cautious as the weekly food inflation has surged to 11.43 percent for the week ended October 15 from 10.60 percent in the previous week. On the same time the textile stocks are likely to show some upmove as the Central government has sanctioned Rs 2,100 crore for setting up 21 new integrated textiles parks with world-class infrastructure in nine States. The new textiles parks, to be set up under public-private-partnership, will attract an overall industry investment of over Rs 9,000 crore generating employment of four lakh workers. Six of the parks would come up in Maharashtra, four in Rajasthan, two each in Tamil Nadu and Andhra Pradesh, one each in Uttar Pradesh, Gujarat, Tripura, Himachal Pradesh, Karnataka, Jammu & Kashmir and West Bengal. Also the impact of recently-announced National Manufacturing Policy will be seen in the markets today.

Apart from this there will be some important result announcements to keep the markets buzzing.BEML, Bharat Electrical, Indian Hotels, NHPC, and tata Global will be among many to announce their numbers today.

The US markets surged on Thursday on reports of breakthrough in the sovereign debt crisis in the euro zone. The leaders there boosted the size of the EFSF in order to isolate the sovereign debt scourge that has infected euro zone nations in addition to Greece. Also the US economy showed modest recovery over the summer, its quarterly GDP numbers showed strongest rise in a year. The Asian markets have made an equally jubilant start with most of the indices trading higher by over a percent.

Back home, festivity begun in Indian markets a day ahead of the festival of lights - Diwali, with sparkling over two percent rally on the October series futures and options contract settlement day. It was a delightful performance by the frontline gauges and the fifty share - Nifty even rallied to re-conquer the important psychological 5,200 pinnacles last seen on August 5, 2011 but eased a tad in last to settle marginally lower from that level. The domestic benchmarks even went on to outclass all the global bourses. The markets which had already factored in a 25 basis point rate hike by Reserve Bank gave a muted reaction to it. The RBI in an unexpected move announced to deregulate the savings bank interest rates with immediate effect which weighed only on the rate sensitive banking counter and major lenders like HDFC Bank, and SBI got butchered by over three percent each. However, a sudden spurt in buying activity came in the second half of trade after market participants rejoiced on hopes that the interests rates have peaked and that the RBI would soften its hawkish anti-inflationary stance and abstain from hiking rates further. Though the central bank cut the nation’s GDP growth forecasts to 7.6% from 8% for the current fiscal year, but it also reiterated that WPI inflation would also ease to 7% by the end of this fiscal. Meanwhile sentiments also got a lift from reports that the government has given its nod for the long-awaited National Manufacturing Policy (NMP) which seeks to set up mega industrial zones and create 100 million jobs by 2022. The NSE’s 50-share broadly followed index Nifty, went for a close to triple digit rally and settled just below the crucial 5,200 support level while Bombay Stock Exchange’s Sensitive Index - Sensex slammed a triple century to close a tad above the psychological 17,250 mark. The broader markets failed to match the fervor that their larger peers displayed. On the BSE sectoral front, hefty short covering was evident in the rate sensitive Auto index topped the gainers space with 2.95% gains followed by IT and Oil & Gas which rose 2.66% and 2.22% respectively. On the flipside, the Consumer Durable and Bankex pockets remained top laggards as the indices shaved off 2.94% and 1.20% respectively. Meanwhile the one and half an hour Muhurat trading session failed to fill any enthusiasm in the markets and the benchmark indices closed almost flat with marginal gains. However, Nifty managed to hold its crucial 5200 level. Traders opted value picks from the broader indices as both the BSE Mid cap and Small cap indices outperformed their larger peers with quiet a margin. Finally the BSE Sensex closed at 17,288.83, up by 33.97 points or 0.20%, while the S&P CNX Nifty closed at 5,201.80, up by 10.20 points or 0.20%.The BSE Mid cap index closed higher by 1.07%, while the Small cap index closed with a gain of 1.45%.

The US markets surged on Thursday, to near three-month highs, lifting the S&P 500 back into positive turf for 2011 and with banks in particular rallying in relief over Europe’s debt accord. Also quarterly data illustrating the largest jump for the US economy in more than a year added to the bulls’ rampage. European leaders agreed to restructure Greek bonds and banks were asked to raise capital and meet higher reserve requirements. Investors in Greek debt accepted a voluntary write-down of 50% and European leaders widened a rescue fund to $1.4 trillion.

In US, the GDP report came as strongest evidence yet that the country isn’t in a recession. US economy in the third quarter expanded at 2.5%, faster than the 1.3% growth in the second quarter. Another report from the Labor Department stated that, initial jobless claims in the week ended October 22 decreased by 2,000 to a seasonally adjusted 402,000. Besides, more than half of the companies in the S&P 500 have released quarterly results since October 11, and about three- quarters have beaten the average analyst estimate.

The Dow Jones industrial average gained 339.51 points, or 2.86 percent, to 12,208.50. The Standard and Poor’s 500 closed higher by 42.59 points, or 3.43 percent, to 1,284.59, while the Nasdaq composite gained 87.96 points, or 3.32 percent, to 2,738.63.

Crude prices surged on Thursday, up by around 3 percent after the Euro-zone leaders struck a deal with private banks and insurers for them to accept a 50 percent loss on their Greek government bonds in a plan to lower Greece's debt burden and try to contain the euro zone crisis. Also there was some good economic news from the domestic front that helped the crude prices move higher. Department of Commerce announced the nation's gross domestic product gained 2.5 percent during the three-month period of the third quarter, the strongest US economic growth in 12 months.

Meanwhile, the Energy Information Administration said this week that demand for gasoline, the most widely used petroleum product in the US, dropped to a 13-year low for this time of year and was 9.2% below a year earlier.

Benchmark crude for December delivery rose $2.66, or 3.0 percent, to $92.86 a barrel, after trading in a range from $90.74 to $92.87 on the New York Mercantile Exchange. In London, Brent crude for December gained 2.84 percent, or $3.09 gain to $112 per barrel on the ICE.