Markets to make a soft start on feeble global cues

The Indian markets plunged in last session, coming out of a long break; major indices lacked direction and succumbed to profit taking. Today, the start is likely to be soft on feeble global cues, however some stabilization can be expected in the latter part of the trade as the markets are already looking sold off. Also, the traders will be getting support with the World Bank’s twice-a-year South Asia Economic Focus report, which has stated that Indian economy, which accounts for 80 percent of South Asia's output, is set to grow by 6.4 percent in 2015-16 as against 5.6 percent in 2014-15. It has further stated that over the next year or so economic growth should be supported by the recovering US economy that would provide a market for Indian merchandise and service exports. There have been similar voices from the other global agency IMF, which has said that India has recovered from its relative slump and its growth is expected to exceed five percent again. Meanwhile, net direct tax collection has risen 7.09 per cent to Rs. 2,68,836 crore in the first six months of the current fiscal year. There will be some buzz in the defence related stocks, as the government cleared 19 defence proposals of various companies.

The US markets tumbled in last session with major indices losing around one and half a percent on global economic growth concerns, following the release of more disappointing German economic data and as the IMF cut its global growth forecast to 3.8 percent for 2015, from 4 percent. The Asian markets have made a weak start taking cues from the overnight selloff in the US markets and most of the indices are showing cut of over a percent in early deals.

Back home, pressurized by feeble global cues, Indian barometer gauges witnessed blood bath on Tuesday with both the major indices losing over a percentage point and ending below their crucial 7,900 (Nifty) and 26,300 (Sensex) levels. Investors remained on sidelines ahead of the second quarter earnings with Infosys to kick-start the September quarter earnings season on Friday. 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 metal, capital goods, consumer durables and realty. Market-participants failed to draw any sense of relief from better-than-expected Service PMI data. Widely-tracked HSBC purchasing managers’ index (PMI) rose to 51.6 points in September against 50.6 in August. Investors also shrugged off report suggesting that CII Business Confidence Index (CII-BCI) for July-September quarter FY15 shot up to 57.4, up from 53.7 in April-June quarter and 49.9 in Jan-March quarter this year. Meanwhile, World Bank has said that Indian economy, which accounts for 80% of South Asia’s output, is set to grow by 6.4% in 2015-16 as against 5.6% in 2014-15. Selling got intensified as European markets made an awful start, while Asian markets remained cautious. Back home, sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 63.24 crore on October 1, 2014. Meanwhile, selling in metal counter too dampened the sentiments amid growth concerns in China, the world’s largest consumer of metals. On the flip side, shares of tyre manufacturers rallied in otherwise subdued market on hopes of higher margins due to falling rubber prices. Prices of natural rubber, the most important raw material for the industry, have dropped to multi-year low in the international market on account of poor demand from countries like China and oversupply of the commodity. Finally, the BSE Sensex plunged by 296.02 points or 1.11%, to 26271.97, while the CNX Nifty drooped by 93.15 points or 1.17% to 7,852.40.