Markets to remain in somber mood a day ahead of F&O series expiry

The Indian markets declined for the second straight day in last session, lacking any supportive cues traders opted to book profit after the recent rally in the markets. Today, the start of the penultimate day of F&O series expiry is likely to be somber and markets may extend their weakness in early deals. Traders will be reacting to the mixed set of earnings, especially the disappointing L&T numbers. The biggest engineering and construction firm of the country though reported more than double Net Profit for the June quarter but profitability of core businesses like engineering, power, material handling and heavy engineering showed pressure on margins. However, traders may get some solace with National Council of Applied Economic Research (NCAER) in a statement saying that India’s GDP will expand at 5.2-5.7 percent this fiscal, with manufacturing sector showing signs of nascent recovery. There will be some buzz in telecom stocks on report that foreign direct investment in the telecom sector grew to $1.5 billion in the first two-months of the 2014-15 fiscal. The textiles stocks too will be in action, as an expert panel constituted by the government has submitted the draft of the new National Textiles Policy, which aims to achieve $ 300 billion exports by 2024-25.

There will be lots of important result announcements to, keep the markets buzzing. Amtek Auto, Arvind, Bank of India, Bharat Forge, CESC, Container Corporation of India, Dhanuka Agritech, Dr Reddy's Laboratories, EID Parry India, IRB Infrastructure, Karnataka Bank, KEC International, Lupin, Pidilite Industries, Torrent Pharmaceuticals, Vipul, Welspun India and Zuari Agro Chemicals will be announcing their numbers.

The US markets ended lower in last session after the US President Barack Obama announced of slapping sanctions on Russian energy, defense and financial sectors on accusations that Moscow continues to support separatists in the Ukraine. The Asian markets have made mostly a positive start ahead of a rate announcement from the US Federal Reserve, though some of the indices are in red on few weak earnings in the region.

Back home, Indian markets extended their down side for the second straight session on Monday and the volatility of the derivative markets current month series expiry appeared ahead of the holiday. Benchmarks, which made a flat start could not resist long the selling pressure and gave up in the very first hour of trade, entering finally into the red with deep gash. None of the corner showed any recovery signs and apart from the bluechips, medium and small cap stocks too lost their way. With the day’s losses Sensex slipped below the 26000 levels, while the Nifty too ended below 7750 mark. On the global front, while most of the Asian markets ended in green, the European markets too made a flat-to-positive start following the Chinese and Hong Kong market after Chinese industrial-company profits jumped the most last month since September; however the local traders remained indifferent and kept booking profits at every upmove. Meanwhile, traders even ignored a positive statement from global ratings agency Moody's that recent decisions by the Reserve Bank of India (RBI) will be credit positive for India's sovereign rating. RBI recently raised the amount foreign institutional investors (FIIs) can buy in government debt to $25 billion from $20 billion. There was some spurt in the final hour of trade but that too could not pull the markets out of red, traders remained concerned ahead of US Federal Reserve’s policy makers two-day meeting starting tomorrow. On domestic front, investors were keeping an eye on the progress of monsoon, earnings and movement of rupee against the dollar. Rupee after a higher opening pared gains. Sectorally, major profit booking was witnessed in realty, metal and oil & gas sector, while modest support came from FMCG, IT and Tech counters. There were lots of result related scrip specific actions, while two power sector stocks JP Power Venture and Reliance Power remained buzzing throughout the day, ending higher by over three percent after latter entered into an MoU to acquire the entire hydro power portfolio of Jaiprakash Power Ventures for an estimated Rs 15,000 crore. Finally, the BSE Sensex plunged by 135.52 points or 0.52%, to 25991.23, while the CNX Nifty declined by 41.75 points or 0.54%, to 7,748.70. Indian markets remained closed on Tuesday on account of Id-Ul-Fitr.