Indian stocks to see cautious opening: Friday Market Preview

Corporate earning reports will see stock-specific action

The Indian market is likely to open on a cautious note despite a positive opening in the Asian pack this morning. On the other hand, the US market closed in the red on Thursday after Federal Reserve chief Ben Bernanke said that the central bank had not envisaged any new bond-buying programme. The SGX Nifty was up 11points at 5,596 against its previous close of 5,585.  

On Wednesday we mentioned that the Nifty may rally up to 5,650, which it did yesterday. The Nifty hit an intra-day high of 5,654, before crashing and closing at 5,600, up 14 points. The market is now moving in an indecisive area. Today’s move will help us decide the further direction.

The market opened lower on Thursday on nervousness among investors following the triple bombings in Mumbai last evening. Also, a mixed opening on the Asian bourses, after Moody's Investor Services threatened to downgrade the credit rating of the US, kept investors on the sidelines. The Nifty opened at 5,569, down 16 points, and the Sensex resumed trade 32 points lower at 18,564. The indices touched their intra-day lows in the first 30 minutes, as the Nifty dipped to 5,542 and the Sensex slipped back to 18,449.

Selective buying pushed the indices gradually upwards around noon, but choppiness saw the indices popping in an out of the red a couple of times. Comments from Planning Commission deputy chairman Montek Singh Ahluwalia stating that acts of terror should not impact market sentiment, gave a firm push to the market in noon trade.

The indices touched their intra-day highs a little past 2.30pm, when the Nifty touched 5,654, up 112 points from the day's low, and the Sensex climbed to 18,803, a gain of 354 points from the low point of the day. However, the gains were short-lived, as massive selling took over and dragged the indices into the red in late trading. Nevertheless, the Nifty closed in the green up 14 points at 5,600 and the Sensex added 22 points from its previous close to end at 18,618.

Wall Street closed lower overnight after Fed chief Ben Bernanke said that the country’s central bank had not provided for any new stimulus programme, going back on his statement on Wednesday that had led to gains on that day. A possible revision in US credit rating by Moody’s also weighed on the markets.

 Earlier, the Labor Department said that weekly jobless claims applications fell by 22,000 to a seasonally adjusted 405,000, the lowest level in almost three months. Also, US retail sales edged up 0.1% in June, after slipping 0.1% in May, as a rebound in receipts from auto dealers offset the biggest drop in gasoline sales in a year.

Among stocks, Google Inc jumped 11% in after-market trading the world’s largest Internet search engine reported sales and profit that topped analysts’ estimates. JP Morgan advanced 1.8% after the New York-based bank reported its highest half-year profit ever, at almost $11 billion. Marriott International Inc declined 6.6% after forecasting earnings that fell short of estimates.

The Dow fell 54.49 points (0.44%) to close at 12,437.12. The S&P 500 shed 8.85 points (0.67%) to settle at 1,308.87 and the Nasdaq lost 34.25 points (1.22%) to end at 2,762.67.

Markets in Asia were mostly higher in early trade on Friday on bargain hunting after the recent decline. Across the region, the Bank of Korea marginally raised its inflation forecast for this year and cut its economic growth projection, reflecting growing risks for Asia's fourth-largest economy. Chinese stocks were under pressure as Beijing extended home purchase restrictions to more cities.

The Shanghai Composite was up 0.27%, the Hang Seng rose 0.13%, the Jakarta Composite rose 0.28%, the Nikkei 225 gained 0.20%, the Straits Times climbed 0.42% and the Taiwan Weighted advanced 0.61%. On the negative side, the KLSE Composite lost 0.19%.

Back home, after an upbeat start, India’s monsoon slipped into the red this week with the country receiving 3% deficient rains since its onset in June. As per statistics released by the India Meteorological Department (IMD), eight of the 36 sub-divisions had received deficient rainfall in a month when farmers take up sowing in a big way.

For the week ending 13th July, the monsoon rains were 19% below normal but the weather office has presented an outlook of fairly widespread rainfall over many parts of the country barring southeast peninsula for the next five days.

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