Morning Be!!......Indian stock indices are trading with minor losses in early morning trade

Indian Markets

The main Indian stock indices are trading with minor losses in early morning trade, stepping back slightly after the previous session's stellar gains and a fantastic start to the year. The undertone is cautious after the fiscal deficit reached more than 90% of the FY12 goal. Also, data from the US showed some softening amid ongoing worries about the eurozone. China's manufacturing PMI reports have been mixed as well. South Korea has swung to its first trade deficit in two years. Australia's home prices fell the most on record in 2011.

Shares of HDFC Ltd. are down in a sluggish market in early morning trade after Carlyle reportedly sold a big chunk of its stake in the housing finance major through a block deal.

More manufacturing PMI reports will be out later in the day from across the globe. The Indian market will also react to the latest trade data apart from the monthly auto and cement volumes.

Talking of fiscal conditions, India’s budget deficit has almost reached the year-end projection. The external balance sheet too is showing some signs of stress. movement in currency and commodities will be crucial going ahead. One has to see how the Government tackles these issues once the political compulsions of state elections subside.

US and European Markets

January offered up an apology to discouraged investors. Unlike 2011, when markets spiked and sunk several hundred points each day but ultimately closed out the year relatively flat, all three indexes mostly climbed higher throughout the month with occasional dips

Eurozone troubles are a big overhang at the moment. The deal on the proposed restructuring of Greek debt remains elusive. Negotiations between Greek government and private bondholders are likely to end today. Portugal is feared to be next in line for seeking writedowns on its debt load. Italy and Spain too have crippling debt burdens. In short, the world economy will do a whole lot better if Europe manages to come out of the current mess largely unscathed.

Asian Markets

Today, barring Strait Times, which is trading marginally lower by 0.1%, all the other Asian indices are trading in the green with Hang Seng & Shanghai trading up by 0.4% & 0.2% respectively. Nikkei & Kospi are trading higher by 0.3% & 0.6% respectively, while Taiwan is trading in the green by 0.3%. SGX Nifty is trading lower by 16 points over Tuesday?s close.

Currencies

The Indian rupee surged against the US Dollar on Tuesday, as local stocks jumped. Foreign funds are investing aggressively into the local stocks, which are attractively valued.

Commodities

Among the metals, Nickel was the only loser falling by 0.8% while Aluminium gained the most (2.4%). Copper and Zinc ended higher by 1% each. Oil for March delivery dropped 37 cents to $98.39 a barrel. Gold futures for April delivery rose $7.40 to $1,740.40 an ounce.

Outlook

Today, we expect the Indian Markets to open flat to marginally in the negative. Later during the day, it could take cues from Dow Futures & European markets for any further direction. With the markets erasing almost all its losses seen on Monday, the underlying trend continues to remain up.

Immediate resistance for Nifty is at 5250, while support is at 5125. Among the indices, Banks, Realty & Auto are looking good and could outperform.

Source- hdfc security, india infoline