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Indian stocks to see cautious opening: Friday Market Preview

The EGoM meeting on fuel will be closely watched by investors

The local market is likely to open on a cautious note on mixed cues from the global arena.  The Empowered Group of Ministers (EGoM) on fuel is likely to meet today to consider a hike in diesel and domestic LPG prices, as well as a cut in duty rates to combat the high cost of crude oil. The surprise development, in the backdrop of the fall in crude prices on Thursday, will give the market some direction, later in the day.

On the global front, markets in the US closed mixed, recovering from the lows of the day, on dismal economic news and lower oil prices as the International Energy Agency (IEA) planned to release more crude from its emergency stockpiles. On the other hand, markets in Asia were trading mostly on speculations that lower oil prices will help economies in the region. The SGX Nifty was 10 point higher at 5,329 compared to its previous close of 5,319.

The market showed strong resilience yesterday, shrugging off weak global cues, high food inflation data and poor US and Asian market trends, to end with decent gains. Buying in heavyweights also supported the upmove.

Weak global cues saw the domestic market opening lower. The Nifty was down nine points at 5,269 and the Sensex started the day at 17,527, lower by 24 points. Banking, realty, auto and metal stocks were on the sellers' radar in early trade, pushing the indices to their intra-day lows in the first 15 minutes. At the day's low, the Nifty slipped to 5,252 and the Sensex to 17,482.

Select buying in stocks like Reliance Industries, ITC and Infosys helped the market overcome initial hiccups and trade in the green. The gains improved as the session progressed and investors shrugged off the spike in food inflation data. The market touched its intra-day high in noon trade, with the Nifty at 5,331, up 53 points and the Sensex surging 204 points to 17,755. Then a weak opening in the European markets dampened sentiments a little and the indices pared some gains. The market traded sideways thereafter, closing slightly below the highs of the day. The Nifty closed at 5,320, a gain of 41 points, and the Sensex advanced finished at 17,727, a good 177 points up.

After six trading sessions, the Nifty has managed a higher high and a higher close. The high of the day was 5,331. The intra-day high was the first resistance we had mentioned in Wednesday's closing report. The next resistance is at 5,355.

US markets, which were sharply down on weak economic data, closed off the lows of the day. The IEA’s decision to release more oil from its strategic stockpiles also hurt investor sentiment. Initial jobless claims rose 9,000 in the week ended 18th June 18 to 429,000, more than analysts’ forecast. The Bloomberg Consumer Comfort Index dropped to minus 44.9 last week from minus 44. New home sales fell 2.1% in May to a 319,000 annual rate, figures from the Commerce Department showed.

Crude oil plunged as low as $89.69 a barrel on the New York Mercantile Exchange before ending down 4.6% at $91.02. Brent crude on the ICE futures exchange saw even deeper losses, dropping 6.1% to $107.26. The IEA move came a day after Fed chairman Ben Bernanke indicated he had no plans to begin a new round of easing.

In Europe, while the European Union and the IMF have endorsed Greece’s 78 billion-euro ($111 billion) austerity package, the country’s lawmakers must support the move in a vote next week, a condition necessary for receiving new loans.

The Dow declined 59.67 points (0.49%) to settle at 12,050. The S&P 500 shed 3.64 points (0.28%) to 1,283.50. On the other hand, the Nasdaq Composite rose 17.56 points (0.66%) to close at 2,686.75.

Markets in Asia were mostly higher on easing of debt concerns in Greece and falling oil prices. Crude ended lower yesterday after the IEA announced that members would release 60 million barrels of oil from emergency supplies to replace lost Libyan oil exports.

Meanwhile, Chinese premier Wen Jiabao has declared victory over domestic inflation, saying that the government has successfully reined in price pressures. China’s leaders will meet early next month to decide the direction for economic policy for the second half of the year.

The Shanghai Composite gained 0.39%, the Hang Seng surged 1.06%, the Jakarta Composite and the KLSE Composite were up 0.01% each, the Nikkei 225 rose 0.28%, the Straits Times advanced 0.14% and the Seoul Composite climbed 0.80%. On the other hand, the Taiwan Weighted lost 0.47% in early trade.

Back home, in the long-running tussle between the National Stock Exchange (NSE) and its younger rival MCX-SX, the Competition Commission of India (CCI) is believed to have penalised NSE for abusing its dominant market position.

As a penalty, NSE has been asked to pay 5% of its three-year average annual turnover and also ‘cease and desist’ of unfair trade practices in the currency derivative trading, sources said.

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