Markets to get a gap-up start on jubilant global cues

The Indian markets continued their southbound journey in the last session, mainly on the back of escalating geo-political tensions. Today, the start of the holiday truncated week is likely to be a gap-up one, as traders across the globe are expecting the situation in Ukraine and Middle East to stabilize. However, there will be some cautiousness ahead of some important macro data to be announced later in the week. Meanwhile, the Reserve Bank of India (RBI) has started discussions with the finance ministry on a new monetary policy framework, including measures to reduce retail price inflation. Traders will be encouraged with the Confederation of Indian Industry (CII) saying that green shoots have started to appear in the manufacturing sector, with a majority of segments likely to post higher output. There will be some buzz in the power stocks, as the World Bank has said that the lender will fund only those hydro-power projects where safeguards are in place to prevent any adverse impact on the environment. There will be some buzz in the pharma stocks too, as the industry has sought a dialogue on a central decision to bring over 100 more drugs under price control, after it failed to get a stay from Delhi High Court on the move.

There will be some result announcements too, to keep the markets in action.  Bosch, Claris Lifesciences,  Divis Lab, Gail India, HPCL, Indian Hotels, Jain Irrigation, Jet Air India, Muthoot Finance, SAIL and Tata Motors will be among many to announce their numbers today.

The US markets made a smart bounce back on Friday on optimism that situation in Ukraine will ease following comments from Nikolai Patrushev, Secretary of the Russian Security Council. The Asian markets have made a jubilant start led by the Japanese market after a report that the nation’s pension fund freed itself to buy more domestic equities.

Back home, Friday turned out to be a disappointing session for the Indian equity indices which got pounded by over a percentage point as investors sold stocks across sectors amid escalating geopolitical tensions in Ukraine and Iraq. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near two week lows, breaching their crucial support levels of 25,400 (Sensex) and 7,600 (Nifty). Selling was both brutal and wide-based, as barring healthcare and FMGC none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included realty metal and power.  Increase in crude oil prices triggered by unrest in Iraq dampened sentiment on the bourses. Some pessimism also came after domestic rating agency India Ratings said that the government will not be able to meet its ambitious fiscal deficit target of 4.1 percent. However, the rating agency has increased its FY15 GDP growth estimate marginally to 5.7 percent from the earlier 5.6 percent, largely on the back of an expected improvement in the industrial activity. Global cues too remained sluggish on speculation about the Federal Reserve raising interest sooner than anticipated. European markets made a disappointing start, while Asian markets too ended mostly in the red. Back home, depreciation in Indian rupee too dampened the sentiments. The rupee was at 61.32 per dollar at the time of equity markets closing as compared to 61.22 per dollar level on Thursday. Sentiments also remained down-beat on report that foreign funds were net sellers to the tune of Rs 73 crore on August 7, 2014. Meanwhile, public oil marketing companies (OMCs) declined as crude oil prices advanced amid escalating geopolitical tensions. Higher crude oil prices usually increase under-recoveries of state-run oil marketing companies on domestic sale of diesel, LPG and kerosene at controlled prices. Finally, the BSE Sensex plunged by 259.87 points or 1.02%, to 25329.14, while the CNX Nifty declined by 80.70 points or 1.06% to 7,568.55.