Markets to make some recovery after a sharp fall of last session

The Indian markets suffered sharp cuts in last session, with major indices losing over one and half a percent for the day. Although the economic reports were better than expected but markets swayed on global tunes. Today, the start is likely to be in green and markets may recover from their slump, however there will be some cautiousness too ahead of RBI monetary policy. Though, the central bank is unlikely to cut rates at its August 5 monetary policy announcement, but may prepare ground for an easier rate regime. Meanwhile, the Finance Ministry has said that achieving the Rs 6.24 lakh crore indirect tax collection target is a “challenge” as the tax buoyancy would depend upon revival of the economy and manufacturing sector. There will be some buzz in the realty stocks on reports that the Union Government will introduce Real Estate Development Regulatory Bill in the winter session of Parliament. The pharma stocks too may come under pressure, as the Indian drugmakers may soon have to cough up 12-15 per cent more in annual facility fees as the Food and Drug Administration (FDA) has announced new rates.

There will be lots of important result announcements too, to keep the markets buzzing. Atul Auto, Aptech, IGL, Kalpataru Power Transmission, Marico, Muthoot Capital Services, OBC, Power Grid Corp, Petronet LNG, Punj Lloyd, Tata Communications and TBZ

The US markets extended their losses in last session mainly on geopolitical worries and some weak economic data. Asian markets have made a mixed start and some of the indices are swinging in and out of red. Though, the Chinese market was trading higher despite People’s Bank of China warning that the country’s credit and money supply have increased rapidly.

Back home, after the late position squaring that led the Indian frontline indices to take a sharp plunge on Thursday, the pessimism got spilled over into Friday’s session as investors continued to trim down positions amid daunting global developments. Indian barometer gauges witnessed blood bath with both the major indices losing over one and a half percentage points and ending below their crucial 7,650 (Nifty) and 25,500 (Sensex) levels. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include consumer durables, oil and gas, metal and capital goods. Sentiments remained down-beat on report that India’s fiscal deficit in the first quarter of the current financial year crossed the halfway mark at 56.1% of the full-year’s target of Rs.5.3 trillion. Moreover, investors shrugged off positive economic development. The core sector output in the month of June has surged to nine-month high at 7.3% mainly driven by healthy production growth in coal, crude oil, cement and electricity. The output of eight core industries grew by 2.3% in May and 1.2% in the same month of previous year. Better-than-expected Manufacturing PMI too failed to lift the sentiments. The HSBC Manufacturing Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rose to 53.0 in the month of July from 51.5 in June. Selling got intensified after European markets made an awful start, Asian markets too ended under water. Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 61.09 at the time of equity markets closing versus its previous close of 60.54. Meanwhile, slump in banking counter too played spoil sport for the Indian equity markets. Sentiments also remained dampened on selling by institutional investors on concerns that robust US jobs data due later today may give the US Federal Reserve much needed comfort to taper its bond buying program and end its easy money policy stance by raising rates sooner-than-expected. Finally, the BSE Sensex plunged by 414.13 points or 1.60%, to 25480.84, while the CNX Nifty declined by 118.70 points or 1.54%, to 7,602.60.