Markets likely to remain cautious on global growth concern

Benchmark indices are likely to open flat tracking Asian peers. However, tumbling oil prices and Greece possibly leaving the Euro zone are the prominent headwinds which are likely to weigh on the markets later during the day. 

Sensex and Nifty plunged more than 3% each on Tuesday, posting their biggest daily fall in over five years tracking a sharp selloff across global markets.

The selloff in Asian equity markets extended, albeit modestly, early Wednesday, tracking a lower finish on Wall Street overnight as the hunt for a bottom in oil prices continued, while worries that Greece may exit the euro zone dented sentiment. However, Asian equities pared losses and are trading in the positive territory. Japan’s Nikkei is up 0.5%, China’s Shanghai Composite has gained 0.4% while Hong Kong’s Hang Seng has gained 0.1%.

The early indicator, SGX Nifty is quoting at 8,136 levels lower by 4 points or 0.05%.

From Japan to Germany to Australia, government borrowing costs reached all-time lows as oil fell 10 percent in just two days and investors wrestled with the risk of global deflation.

Data from the euro zone due later on Wednesday are expected to show the first annual fall in consumer prices since 2009, piling pressure on the European Central Bank to launch all-out quantitative easing at its next policy meeting on Jan 22.

Overnight, US stocks settled lower as data pointing to a slowing growth in the US service sector weighed on trading sentiment. On Wall Street, the three major stock indexes fell for a fifth straight session. For the S&P 500 it was the longest losing streak since late 2013.

The Dow shed 0.75%, the S&P 500 0.9% and the Nasdaq 1.29%.

Stocks to watch:

Power stocks and Coal India are likely to remain in focus as a five-day strike announced by Coal India Ltd (CIL) worker unions is likely to hit the power sector.

The telecom sector is likely to hog limelight as telecom spectrum prices are expected to go through the roof, as was the case in 2010, when leading operators went into financial trouble after forking out Rs 67,000 crore for only three slots of 3G spectrum (five MHz each).

Energy stocks are likely to remain on the radar after the collapse in oil intensified with U.S. prices closing below $50 a barrel for the first time in nearly six years.

The auto sector is likely to remain in focus with prices of cars and sports utility vehicles (SUVs) soaring by five-to-six per cent following the withdrawal of the excise duty concession in December 2014.

From the healthcare space, three domestic firms, Aurobindo Pharma, Lupin and Jubilant Life Sciences, have received final approval from US health regulator to sell generic copies of Valsartan tablets used for treatment of hypertension.