Markets to make weak start of the new week

The Indian markets suffered sharp plunge in last session and both the major indices lost over a percent on global growth concern. Today, the start is likely to remain cautious and muted, as all the Asian peers have made a weak start and Nifty may retest its crucial 7800 support levels in the very early deals. Traders will be first reacting to the disappointing IIP data announced after the market hours on Friday, which rose by just 0.4 per cent in August, substantially below the expectation of 2.4 per cent. Marketmen will also be eyeing the Consumer Price Index (CPI) data to be announced later in the day, however it is expected to ease to 7.2 per cent for the September as compared to 7.8 per cent reported in the month of August, helped by lower food and fuel costs. Meanwhile, Finance Minister Arun Jaitley has given the go-ahead for a major overhaul of the current monetary policy framework wherein the Centre will specify ‘inflation targets’ for the Reserve Bank of India (RBI) to achieve and the RBI will set inflation as its top priority in its policy statements. There will be buzz in the India Inc on reports that the Reserve Bank of India (RBI) plans to announce the final norms on small and payments banks next month. There will be some buzz in the coal and power stocks too, as the PMO has asked the Coal Ministry to work out a plan of action to deal with the present situation -- arising out of the Supreme Court’s cancelling the allocation of 214 coal blocks.

With the official start of second quarter earnings season there will be lots of stocks in limelight based on their numbers. Oil major Reliance Industries too is scheduled to declare its results for the quarter ended September 30 post market hours today. Other important results will be Indusind Bank, Sintex and Liberty Shoes etc.

The US markets extended their weakness in last session with the Dow erasing gains for the year and S&P posting its biggest weekly loss in two years. The Asian markets too have extended the rout and most of the indices are suffering deep cut in early deals.

Back home, Indian barometer gauges witnessed bloodbath on Friday with both the major indices losing over one percent and ending below their crucial 7,900 (Nifty) and 26,300 (Sensex) levels. Sentiments remained dampened throughout the session after two Fed officials’ indicated that the Federal Reserve will probably start raising interest rates around the middle of next year. Moreover, investors opted to stay away from risky assets ahead of the industrial production data due later during the day. Selling was both brutal and wide-based as none of sectoral indices, barring software and technology, on BSE were spared. Counters, which featured in the list of worst performers, include metal, auto and fast moving consumer goods. Sentiments remained down-beat on report from the HSBC Emerging Markets Index (EMI) has stated that manufacturing and services sectors in India expanded at a slower pace than China in September, even as emerging market output touched an 18 month high in the same month. Moreover, market-participants failed to draw any sense of relief from better than expected Infosys numbers. The IT bellwether has not only surpassed market expectations on almost all operating and financial fronts but gave a surprise to the street with a 1:1 bonus announcement. However, the company has maintained its guidance at 7-9% in dollar revenue growth, which is much lower than Nasscom’s growth rate of around 13-15%. Investors also failed to draw heart from Department of Industrial Policy and Promotion’s (DIPP) statement that India will receive the highest-ever inflow of foreign direct investment (FDI) in the current financial year, attracted by the policy reforms announced by the new government. Selling got intensified as European markets made an awful start, while the Asian markets too ended the session in the red. Back home, the market sentiment was weighed down by the weakness in rupee which fell in on Friday due to fresh demand for the US currency from banks and importers. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 20.89 crore on October 9, 2014. Stocks related to metal sector hit rock bottom on the back of swift retreat in Chinese demand for iron ore and coal which in turn led the global iron ore prices to touch near five-year lows and local coal prices to their weakest in six years. Finally, the BSE Sensex plunged by 339.90 points or 1.28%, to 26297.38, while the CNX Nifty dropped by 100.60 points or 1.26% to 7,859.95.