Pre Session: Indian markets may get bogged down today on concerns about oil prices Analysis for Jan 05, 2012

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Indian markets may be bogged down today by the news that EU governments have reached a deal in principle to ban imports of Iranian oil. This has already caused a sharp hike in the price of Brent crude and may sound alarm bells for the Indian economy. The RBI Deputy governor stated today that if the rise in oil prices continue then it will leave little room for reversal of the monetary policy to growth- oriented one. Some good news that may inject positivity in the Indian markets today is the HSBC Services PMI index which rose to a five month high of 54.7 in December, indicating expansion in services activity. The FIIs were net buyers yesterday in the Indian equity markets and this ensured that the decline was not significant. The FIIs may once again provide support to the Indian markets today.

Today, most of the Asian markets have opened weakly and on a mixed note as global cues from the European and US markets became uncertain once again. The US markets ended on a mixed note yesterday. The market sentiments were depressed once again by headwinds emanating from Europe as financial conditions in Spain and Hungary raised concerns of the market participants. The sentiments were further depressed by Chinese Premier Wen Jiabo"s statement that China too is facing a number of economic difficulties because of the prevailing global macro-environment. Most of the European Markets ended in red yesterday as market participants became concerned about the problems in Spain and Hungary. Germany had not such a good bond auction yesterday and this increased the worries of the markets. The uncertainty was strengthened after news came that EU governments have reached a deal in principle to ban imports of Iranian oil. This may cause crude oil prices to spike further in the coming days.

The net investments by FIIs on 4th January, 2012 in Indian capital markets stood at Rs 1503.30 crore. The net FII investments were positive yesterday.

The gross purchases by the FIIs in the Indian equity markets were of Rs. 1356.50 crore. The gross sales were of Rs. 1030.90 crore. The net investment in the equity markets by FIIs on January 4th, 2012 stood at Rs 325.70 crore.

The gross purchases by the FIIs in the Indian debt markets were of Rs 2191.20 crore. The gross sales by FIIs were of Rs 1013.60 crore. The net investment by the FIIs in the debt markets stood at Rs 1177.60 crore.

Today, most of the Asian markets have opened weakly and on a mixed note as global cues from the European and US markets become uncertain once again. At 7.40 A.M. Indian time, the Nikkei 225 was down 46.08 points and was at 8514.03. The Hang Seng was up 24.77 points and was at 18752.08. The Taiwan weighted was up 8.13 points and was at 7091.01. The Shanghai composite was down 9.30 points and was at 2160.09.

The US markets ended on a mixed note yesterday. The market sentiments were depressed once again by headwinds emanating from Europe as financial conditions in Spain and Hungary raised concerns of the market participants. The sentiments were further depressed by Chinese Premier Wen Jiabo"s statement that China too is facing a number of economic difficulties because of the prevailing global macro-environment. The Nasdaq closed at 2648.36, losing 0.36 points over the previous day"s closing. The Dow Jones Industrial gained 21.04 points and closed at 12418.42. The S & P 500 gained 0.24 points and closed at 1277.3.

Most of the European Markets ended in red yesterday as market participants became concerned about the problems in Spain and Hungary. Germany had not such a good bond auction yesterday and this increased the worries of the markets. The uncertainty was strengthened after news came that EU governments have reached a deal in principle to ban imports of Iranian oil. This may cause crude oil prices to spike further in the coming days. The DAX lost 55.02 points and closed at 6111.55. The FTSE 100 lost 31.46 points and closed at 5668.45. The CAC was down 51.75 points and closed at 3193.65.

Gold futures ended higher by 0.9 % to close at $1612.70 per ounce, while silver prices gained 1.5 % and closed at $ 29.14 per ounce. Crude oil gained 0.3 % to close at $ 103.22 per barrel.

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