Markets to extend the somberness on global worries

The Indian markets after defying the global worries for the major portion of trade, gave up in last hour and suffered cut of about a percent in last session. Today, the start is likely to be lower once again tailing feeble global cues, however some recovery can be expected in the latter part of the trade. Meanwhile, Reserve Bank of India (RBI) governor Raghuram Rajan has called the central bank's consumer price index goal of 6 percent by January 2016 “reasonable”, but said the government would ultimately weigh in on the ultimate inflation goal. He has also said that 4.1 percent fiscal deficit goal set by the government for the current fiscal is an “ambitious target”. Today, the railways and defence stocks will remain buzzing, as the Cabinet has cleared the long-delayed proposal for raising FDI limit in defence to 49 percent and fully opened up the railway infrastructure segment. On the other hand, the IT stocks are likely to come under pressure, as the global technology major Cognizant Technology Solutions despite posting line with expectations June quarter earnings, has scaled down its annual revenue growth estimate to be at least 14 per cent, against the earlier estimate of 16.5 per cent.

There will be some important result announcements too, to keep the markets in action. Aurobindo Pharma, Balrampur Chini, Bombay Dyeing, Fortis Healthcare, India Cements, Nestle India, Neyveli Lignite and Talwalkar are among many to report their earnings.

The US markets made a flat closing with a positive bias, recovering from their last session’s fall. There were concerns about the ongoing conflict in Ukraine that weighed on the sentiments, while the Commerce Department reported that the US trade deficit narrowed to $41.5 billion in June and raised concerns about the outlook for monetary policy. The Asian markets have made a soft start, leading to their third straight decline. Japanese market too was trading lower after the yen gained 0.5 percent against the dollar.

Back home, Indian barometer gauges witnessed bloodbath on Wednesday as investors opted to book profit after two consecutive sessions of jubilation amid feeble global cues. Frontline indices ended the session with a cut of around a percentage point and declined below their crucial 7,700 (Nifty) and 25,700 (Sensex) levels. Selling was both brutal and wide-based as none of sectoral indices on BSE, barring software and technology, were spared. Counters, which featured in the list of worst performers, include metal, banking and realty. Sentiments remained down-beat as Indian rupee depreciated against the dollar. The rupee fell to a four-and-half month low on Wednesday as broad gains in the dollar versus other majors and Asian units hurt. Moreover, markets also overlooked some developments happening on new indirect tax regime, Goods and Services Tax, which the government announced was likely to be introduced shortly. Minister of State for Finance Nirmala Sitharaman also highlighted that centre in consultation with states had decided to phase out CST to facilitate introduction of GST and to give compensation to the states for revenue loss on this account. Selling got intensified as European markets made an awful start, Asian markets too ended in the red. Back home, slump in banking counter too played spoil sport for the Indian equity markets after IDBI’s Q1 disappointed street. The bank has reported a sharp 66% year-on-year (yoy) drop in net profit at Rs 105 crore for the first quarter (April-June) of current fiscal, due to lower net interest income (NII) and other income. The public sector lender had a profit of Rs 307 crore in the same quarter last year. On the flip side, software and technology stocks edged higher as rupee depreciated against dollar. Additionally, sugar stocks too sweetened after 95-odd private sugar mills in Uttar Pradesh decided to crush no sugarcane in the 2014-15 season, scheduled to start from October until the state government gives in to two of their demands, with the first being linking mandated price to the market price of sugar and the other being, stopping its ongoing coercive action against mills for not clearing past arrears to farmers for cane. Finally, the BSE Sensex plunged by 242.74 points or 0.94%, to 25665.27, while the CNX Nifty declined by 74.50 points or 0.96%, to 7,672.05.