Markets are likely to see a positive start on the back of positive global cues. However, gains are likely to be capped as investors assess oil price movement. At 7:30am Indian Standard Tim (IST), the SGX Nifty was trading 0.6%, or 45 points, higher at 7,093 levels.
On the domestic front, government’s U-turn on the retrospective tax issue as regards Vodafone could also dent sentiment. The income-tax department has issued telecom giant Vodafone a reminder for what it claims to be Rs 14,200-crore capital gains tax dues and has threatened to seize assets on non-payment.
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On Tuesday, markets ended lower amid profit taking with PSU bank shares leading the decline. Declining merchandise exports in January also weighed on market sentiment. The S&P BSE Sensex ended down points at and the Nifty50 closed 75 points lower at 7,088. In the broader market, the BSE Midcap index ended down 2.4% and the Small-cap index ended down 2.2%. Market breadth ended negative with 2003 losers and 615 gainers on the BSE.
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"Tuesday's gain failed to inch up investor’s confidence. The Nifty is showing a trend reversal pattern with its global peer. It is more of a sell on rally market and expects that all the global headwinds are yet to be factored. Bears continue to have an upper hand over bulls, any positive consolidation will be engulfed towards the next support level," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services in a note.
ASIAN MARKETS
Asian shares were taking a breather on Wednesday, looking to consolidate two sessions of solid gains as risk appetites finally showed some resilience to the latest selloff in oil prices.
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A welcome break from weeks of turbulence saw the safe havens such as the yen and sovereign bonds ease just a little, though investors face a test later in the day when the Federal Reserve releases minutes of its last policy meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan was off just a shade in early trade, having climbed 3% over the previous two sessions. Japan's Nikkei put on 0.2%, bringing its gains for the week so far to almost 8%.
Overnight, the Dow ended Tuesday with gains of 1.39%, while the S&P 500 added 1.65 percent and the Nasdaq 2.27%. All 10 S&P sectors closed higher following an extended holiday weekend, with financials, healthcare and materials recouping some lost ground.
OIL PRICES
US crude futures rebounded on Wednesday on investor hopes a deal between Saudi Arabia and Russia to freeze oil output at January levels would lead to a wider pact among producers that could eventually see production cuts to support prices. US crude had risen 24 cents to $29.28 a barrel, after ending the previous session down 40 cents.
Top oil producers Russia and Saudi Arabia on Tuesday agreed to limit oil production at January levels, provided other oil exporters joined in, and stopping short of agreeing cuts in oil output.
Iraq, Qatar and Venezuela said they would freeze output at January levels provided a deal could be agreed, while OPEC member Iran could be offered special terms to freeze oil production levels, sources said.
With Reuters inputs
