The frontline Indian stock indices appear to be in 'no-man's-land' in early morning trade after a strong rally in the preceding session, as investors prefer to stay on the sidelines ahead of an important trading day on Thursday. Markets will digest the latest data on industrial production besides results from finance major HDFC and IT titan Infosys.
Despite the sluggish trend in Large-Cap shares, the market breadth is positive due to persistent gains in the broader indices. The BSE Small-Cap and the BSE Mid-Cap indices have gained for a third successive session this week. The two broader market benchmarks are up ~0.5% each at the moment.For India, the most eagerly awaited events this month is the January 24 RBI policy meeting. Meanwhile, the prospects for the Indian economy continue to look rather glum in the face of mixed bag macro-economic numbers.
US and European Markets
U.S. stocks advanced Tuesday, on the back of gains in global markets, as investors grew optimistic following upbeat comments about Europe and a decent start to quarterly corporate results. Dow Jones rose 70 points, or 0.6%, and S&P 500 added 11 points, or 0.9%. Both indexes finished at their highest levels since July. Nasdaq composite increased 26 points, or 1%.
Tuesday's broad move higher came as investors found comfort in Fitch Rating's comments about Europe being on the right path toward solving its debt problems.
The Census Bureau reported that wholesale inventories for the month of November rose 0.1%.
Asian Markets
Today the Asian indices are trading in the green except Kospi and Shanghai, which are down by 0.3% and 0.2% respectively. Nikkei and Hang Seng are trading higher by 0.2% each while Strait Times and Taiwan are up by 0.1% each. SGX Nifty is trading higher by 4.5 points.
Currencies
The Indian rupee rose to a one-month high against the US Dollar on Tuesday, boosted by a spate of fund inflows from overseas investors into high-yielding local debt. The gains were accentuated by thin volumes, highlighting the sharp swings that have resulted from a recent central bank rule limiting speculative trades in the currency market. Also comments from a federal government official that Moody's had upgraded India's short-term country ceiling on foreign currency bank deposits boosted sentiments.
Commodities
Among the metals, Aluminium gained the most (3.7%) followed by Zinc, which rose by 3%. Nickel and Copper ended higher by 2.8% and 1.9% respectively.Oil for February delivery added 93 cents to settle at $102.24 a barrel. Gold futures for February delivery gained $23.40 to settle at $1,631.50 an ounce.
Outlook
Today, the Indian market is likely to open on a flat to positive note. 4,800 on the nifty holds as a strong support and until this level gets breached the uptrend could continue. Among the sectoral indices, Metals and IT stocks could do well.
Source- HDFC SECURITY, India Infoline
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