The Indian markets made a good attempt in the final hours but could not manage a close in green in the last session; traders remained concerned about the Iraqi crisis coupled with the unexpected surge in WPI inflation on the domestic front. Today, the mood is likely to remain somber with deepening conflict in Iraq and amid weakening hopes of any rate cut by RBI in its upcoming policy review after the rise in inflation. Meanwhile, Finance Minister Arun Jaitley has attributed the rise in inflation partly to withholding of food stocks by traders and has said the Centre is committed to ease supply side bottlenecks and has also asked states to take firm measures against hoarders to check speculation. Today, the oil & gas stocks including the PSU oil marketing companies are likely to see some action, as a report has indicated that India recorded the largest volumetric decline in natural gas production and consumption last year, on the same time losses on sale of diesel have dipped to a record low of Rs 1.62 per litre, raising the prospect of deregulation of the fuel. Steel stocks too may react to a Steel ministry report that raw material supply crunch due to environmental constraints, mining caps, inadequate infrastructure may move iron ore and strain overall reserves position. There will be some negative reaction on the cement stocks on buzz that Railway Minister may hike the freight rates along with passenger fares in the budget next month.
The US markets ended slightly higher in the last session, though the trade remained lackluster throughout the day as trader weighed worries about the deteriorating security situation in Iraq. The Asian markets have made mostly a soft start and barring Japanese market which has strengthened on weaker yen, all other indices are swinging in and out of the red.
Back home, extending their previous session southward journey, Indian equity benchmarks ended the Monday’s session in the red, pressurized by rising crude oil prices coupled with higher than expected inflation numbers. Domestic bourses made a choppy start and the indices even went on to test important psychological 25,100 (Sensex) and 7,500 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their losses from thereon as investors continued hunt for fundamentally strong stocks. Some support also came on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,099.92 crore on Friday, as per provisional data from the stock exchanges. Overall, sentiments remained dampened after the annual rate of inflation, based on monthly WPI, came in at highest level since December 2013, at 6.01% for month of May 2014, as compared to 5.20% in April and 4.58% during corresponding month in the previous year, driven by costlier protein-based items, fuel and some manufactured products. Meanwhile, India’s services exports in the first month of 2014-15 stood at $13.63 billion, marginally lower than $14.32 billion in March 2014. However, services imports in April 2014 also were lower at $ 8.06 billion, from its previous month, when it stood at $8.49 billion in March. For the previous fiscal, India's services exports stood at $167.01 billion while imports were at $88.19 billion. Global cues too remained sluggish with European markets opening mostly in the red, while Asian markets ended in the red. Back home, the rupee weakened to 60 to a dollar in morning, its lowest in more than a month. Selling in banking counter too dampened the sentiments after higher headline inflation data dampened the chances of RBI slashing key policy rates in its monetary policy in August. On the flip side, shares of public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC, erasing their entire early morning losses, bounced back in trade after the government said under-recovery on high speed diesel declined further to Rs 1.62 per litre from Rs 2.80 per litre earlier. Finally, the BSE Sensex declined by 37.69 points or 0.15%, to 25190.48, while the CNX Nifty was down by 8.55 points or 0.11%, to 7,533.55.
