The Indian markets remained in consolidation mood and suffered some profit booking at the higher levels with traders not looking much enthused with the portfolio allocation of the new government. Today, the start of the penultimate day of the F&O expiry is likely to see some green in the early deal but lots of volatility too can be expected. Traders will be eyeing the announcements made by different ministry after taking charge. Meanwhile, the Finance Ministry has said that it has to be watchful of the Current Account Deficit (CAD) as well as the rupee because global markets are still volatile. There is likely to be buzz in the PSU sector stocks, as the Securities and Exchange Board of India (Sebi) after successfully implementing the 25 per cent free-float norm for private companies, now wants the government to pare its holdings in public-sector undertakings (PSUs) to below 75 per cent. There will be some cheers in the realty stocks on a report that government is likely to grant infrastructure tag to low-cost housing segment, which will enable real-estate developers to get finance from banks and for longer tenures. However, there will be some amusement for the retail stocks as the Commerce & industry minister Nirmala Sitharaman has indicated that the government may not immediately allow foreign supermarket chains to open multi-brand retail outlets.
There will be lots of important result announcements too, to keep the markets buzzing. Aban Offshore, Amara Raja, Apollo Hospitals, BEML, Bombay Rayon, DCM, Escorts, Godrej Inds, Hero MotoCorp, Havells India, HPCL, Indraprastha Gas, JK Tyre, Karur Vysya Bank, Parsvnath Developers and SAIL will announce their numbers today.
The US markets continued their uptrend after a long weekend, with the S&P 500 reaching a new record closing high on getting report of an unexpected increase in durable goods orders in the month of April. The Asian markets have mostly made a positive start after China reported an industrial profits increase of 10 percent this year through April from the same period in 2013.
Back home, Tuesday’s trading session was a disappointing session of trade for the Indian equity markets, as market participants booked profits in recent outperformers mainly power and PSU sector stocks. Investors’ remained cautious after India’s new Prime Minister Narendra Modi named his cabinet, which seems to have potential for policy conflict between ministers wanting faster economic growth and the Reserve Bank of India, which wants to tame inflation. Sentiments also remained dampened on report that foreign institutional investors (FIIs) sold shares worth a net Rs 84.13 crore on May 26, 2014, as per provisional data from the stock exchanges. Depreciation in Indian rupee too dampened the sentiments. The Indian rupee was trading lower against the US dollar at Rs 59.03 amid demand for US dollars from oil importers. However, losses remained capped up to some extent after the Reserve Bank of India reported a sharp moderation in imports, especially of gold, helping India's current account deficit (CAD) to sharply narrow to 1.7 percent of GDP, in FY’14 from 4.7 percent in FY’13. Traders will also be eyeing the weakness in rupee and the movement in export-oriented stocks. Global cues too remained sluggish with European markets making cautious start and most of the Asian counters too shut shop in the red. Back home, stocks of non-banking finance companies (NBFC) viz. IFCI, Reliance Capital, Manappuram Finance, Muthoot Capital Services, Shriram Transport Finance Company, IDFC, L&T Finance Holdings all edged lower after the Reserve Bank of India (RBI) tightened merger rules for non-banking finance companies, requiring them to obtain the RBI’s written permission to acquire or merge with any similar entity, in order to ensure their fit and proper management. Additionally, most of the sugar stocks declined on sluggish demand from bulk consumers ahead of the monsoon season. On the flip side, stocks related to software and technology counters showed some relief on the back of rupee depreciation, which slipped below the psychological 59 per dollar mark. Finally, the BSE Sensex plunged by 167.37 points or 0.68%, to 24549.51, while the CNX Nifty declined by 41.05 points or 0.56%, to 7,318.00.
