Global cues indicate flat-to-positive opening: Friday Market Preview

Oil dropped a second day in New York after the US, Saudi Arabia and the International Energy Agency made assurances that they can compensate for any disruption of Libyan shipments
Cues from markets around the world indicate a flat-to-positive opening for the domestic market. Also, railway minister Mamata Banerjee’s assurance that the railway budget will be ‘passenger-friendly’ is also expected to lift investor sentiments. 

On the global front, Wall Street ended marginally lower on Thursday, down for the third day in a low, but pulled back from early lows news of a retreat in oil prices from their highest level since 2008. Markets in Asia were mixed as news of crude prices coming off their multi-year highs lured investors to riskier assets. The SGX Nifty was 36 points higher at 5,323 compared to its previous close of 5,287 on Thursday.

The market opened weak yesterday on worries that rising crude prices in the wake of the ongoing flare-up in West Asia might lead to a harsh Union budget. Trading sentiment remained bearish on the back of a weakening global trend, which raised concerns of rising inflation and higher interest rates. A marginal rise in weekly food inflation numbers for mid-February pulled the key indices further down. The Sensex dipped below the psychological 18,000 points level in late morning trade. The market traded in a narrow range for a brief period post-noon, but plunged subsequently to close 3% down. 

On Wednesday, we had mentioned that the market could be setting itself up for another steep decline, though the indicators were not clear. The Sensex fell 546 points to 17,632, while the Nifty fell 175 points to 5,263. The fall happened on the back of news of spiralling oil prices. The 380-point gain on the Nifty in six days of trading since 11th February have been almost wiped off by the 343-point drop in four days, including yesterday. The decline will continue, subject to weak rallies.

Oil dropped a second day in New York after the US, Saudi Arabia and the International Energy Agency made assurances that they can compensate for any disruption of Libyan shipments.

Crude for April delivery dropped as much as 89 cents to $96.39 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.61 in morning trade in Singapore. Yesterday, the contract fell 82 cents to $97.28 after climbing to the highest intraday price since 29 September 2008. Brent oil for April settlement fell as much as 0.8%, or 83 cents, to $110.53 a barrel on the London-based ICE Futures Europe exchange.

Markets in the US closed with marginal declines as key indices pared early losses on news that crude prices retreated from their multi-year highs. This apart, the International Energy Agency’s assurance that it is prepared to release emergency stockpiles if supplies are disrupted, helped the recovery in the markets.

In economic news, U.S. economic data came in mixed. Initial jobless claims fell more than expected. Labor Department data showed that applications for jobless benefits fell by 22,000 to 391,000 in the week ended 19th February. New orders for durable goods jumped 2.7% in January due to a boost in aircraft bookings, while new orders for non-defence capital goods excluding aircraft declined 6.9% last month. This apart, new home sales fell 12.6% in January to a seasonally-adjusted 284,000 from a 8.8% fall to a downwardly revised 324,000 pace in the previous month.

The Dow declined 37.28 points (0.31%) to settle at 12,068.50. The S&P 500 Index shed 1.30 points (0.10%) at 1,306.10. On the other hand, the Nasdaq gained 14.91 points (0.55%) at 2,737.90.

Markets in Asia were mixed in early trade on Friday taking support from the new that oil prices cooled down from their multi-year highs. The news eased worries about the economic recovery in the region. New York oil futures retreated from $103.41 on Thursday, the highest in 29 months, after president Barack Obama said the US will be able withstand setback stemming from the turmoil in Libya.

The Hang Seng gained 0.62%, the KLSE Composite rose 0.31%, the Nikkei 225 advanced 0.22% and the Straits Times gained 0.70%. On the other hand, the 
Shanghai Composite declined 0.88%, the Jakarta Composite was down 0.22%, the Seoul Composite fell 0.20% and the Taiwan Weighted lost 0.78% in early trade today.

Back home, railway minister Mamata Banerjee on Thursday said the rail budget will be a “passenger-friendly budget” dedicated to the common man of the country. The rail budget FY12 will be presented in Parliament later today.

Without revealing any budget details, she said: “It will be people-friendly, passenger-friendly and country-friendly budget.” Speculations are rife that the budget may see some marginal increase in upper class AC fare with sleeper class fare remaining untouched.
 

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