Markets to make a soft start on geopolitical worries

The Indian markets despite some choppiness managed gains of about a quarter percent in last session. Today, the start is likely to be soft tailing sluggish global cues and the geopolitical worries are likely to have their impact on the Indian markets too. Also, as the Indian Agriculture Research Institute officials have stated that if monsoon remains weak in key States in the next week, then kharif production is likely to be lower by an estimated 10 per cent. However, there is some positive news too, the foreign direct investment (FDI) flows into the country more than doubled to $3.60 billion in May, the highest in the last eight months. The Power sector stocks are likely to remain under pressure on reports that nearly half of the thermal power plants in the country, including over 20,000 MW capacity stations of state-run NTPC, are reeling under coal shortage with stocks to last less than a week. There will be some buzz in the IT stocks too, after TCS, the largest software exporter in the country despite registering a 4.5% sequential decline in April-June net profit at Rs 5,058 crore, stood better than street estimates.

There will be lots of important result announcements to keep the markets buzzing. Astral Poly, CRISIL, Reliance Infra, Reliance Power, SKF India, Supreme Petro and Zee Entertinment are among many to announce their numbers.

The US markets despite a good start ended sharply lower in last session with geopolitical concerns generating considerable selling pressure, on news that a Malaysia Airlines passenger plane crashed in eastern Ukraine. The Asian markets have mostly made a negative start led by the Japanese market; Chinese market too was lower as the new-home prices in the country fell in 55 of 70 cities monitored last month from May.

Back home, Indian equity benchmarks ended the choppy day of trade on quiet note with positive bias as investors turned cautious and booked profits at higher levels. Sentiments remained optimistic on report that overseas investors bought Indian shares worth 6.21 billion rupees on July 16, 2014. Some support also came on report that the deficit in monsoon rains is expected to narrow next week as the grain bowl in northwest, oilseed areas of central parts and cotton belt of the western region are set to get higher downpours. The monsoon rains were 15% below average in the past week, against 41% below average rainfall in the previous week. However, upside remained capped as investors remained on sidelines ahead of important numbers of IT bellwether Tata Consultancy Services (TCS). The company is likely to report modest decline in net profit on Q-o-Q, weighed down by impact of salary increases and appreciation of rupee. Global cues remained sluggish with Asian markets ending mostly in the red. Back home, rally in capital goods shares aided the sentiments as stocks like, L&T and BHEL edged higher after Reserve Bank of India (RBI) announced incentives to raise long term bonds for infrastructure financing. Metal pack witnessed heavy buying with Hindalco and Tata Steel followed by Coal India and Sesa Sterlite on the back of positive Chinese GDP growth data. Power stocks too remained investors’ choice after Delhi Electricity Regulatory Commission (DERC) approved tariff hike of 8.32 percent for all three discoms Reliance ADAG-owned discom BSES Yamuna Power (BYPL), BSES Rajdhani Power (BRPL), Tata Power Delhi Distribution Company (TPDDL). Export oriented stocks too remained on buyers’ radar, as Federation of Indian Exports Organisations (FIEO) has said that export momentum is likely to continue in the coming months on the back of higher demand helped by an uptick in global economies and measures announced in the Union Budget. Finally, the BSE Sensex added 11.44 points or 0.04%, to 25561.16, while the CNX Nifty gained 16.05 points or 0.21%, to 7,640.45.