Markets to remain in consolidation mood with a cautious start

The Indian markets snapping their three-day advances ended with a quarter percent of loss in last session, traders overlooked the good macro data and went for profit booking on global growth concern. Today, the start is likely to be cautious-to-mildly in red. Meanwhile, the buzz will continue in the gold related stocks, as India's gold imports rocketed in October, accelerating the trend in the third quarter of 2014 and prompting the government to consider restrictions on shipments. The Finance Ministry and the Reserve Bank of India will continue their deliberations in a day or two on reviewing ‘80:20’ scheme for gold import. This scheme mandates an entity importing gold to re-export 20 per cent of it in value-added form. There is likely to be buzz in the India Inc with RBI expected to come out with detailed guidelines for getting a payments bank licence by the end of the month. India Post and mobile companies have a good chance, while, successful microfinance institutions may get a chance to migrate to commercial banking. The PSU oil marketing companies may remain under pressure with the government raising excise duty on petrol and diesel by Rs 1.50 to shore up its kitty. The government is expected to mop up an additional Rs 6,000 crore in the remaining period of the current fiscal.

The US markets ended modestly higher and the Dow surged to a record, offsetting declines in small-cap and energy shares. Good earnings announcements from Wal-Mart gave the initial lead, while the news on the merger-and-acquisition front also generated some positive sentiment. The Asian markets have mostly made a soft start, the Japanese market too was trading lower despite the dollar touching a seven-year high versus the yen amid speculation that Prime Minister Shinzo Abe will call an early election.

Back home, Indian equity benchmarks ended the Thursday’s trade in red terrain with a cut of around quarter of as percent a investors remained on sidelines ahead of Wholesale Price Index (WPI) data for the month of October, to be released on November 14. Market traded near neutral lines for most part of the day’s trade but declined sharply in red in late trade as the government hiked the excise duty on petrol and diesel prices by Rs 1.50 per litre. However, losses remained capped on report that foreign institutional investors were net buyers in Indian equities worth Rs 459.47crore on Wednesday, as per provisional stock exchange data. Investors shrugged off positive macro development where Consumer price index (CPI) inflation in October fell sharply to 5.52 percent from 6.46 percent in September. On the same time the Index of Industrial Production for the month of September grew by 2.5 percent on the back of strong performance by the manufacturing sector that expanded after two months of contraction. Moreover, market participants failed to draw any sense of relief from Paris based Organisation for Economic Cooperation and Development’s (OECD) statement that India is the ‘only major economy’ that is projected to see a pickup in growth momentum whereas mixed trends are predicted for the developed world. On the global front, European markets staged a modest rebound, while the Asian markets ended mixed. Back home, depreciation in Indian rupee dampened the sentiments. Rupee was trading at 61.56 per dollar at the time of equity markets closing compared with its previous close of 61.49. Meanwhile, public sector oil marketing companies (OMCs) declined after petrol, diesel excise duty hike. The government hiked excise duty on branded diesel to Rs 5.25 per litre from Rs 3.75 per litre, while excise on branded petrol was increased to Rs 3.85 per litre from Rs 2.35 per litre.  Additionally, excise duty on unbranded diesel went up to Rs 2.96 per litre from Rs 1.46 per litre and that on unbranded petrol was increased to Rs 2.70 per litre from Rs 1.20 per litre. Moreover, shares of the frontline banks ended lower on profit booking after rallying nearly 14% in past one month. On the flip side, shares of sugar manufactures remained in demand after the Uttar Pradesh cabinet on Wednesday decided not to increase sugarcane prices for the 2014-15 crushing season. Finally, the BSE Sensex declined by 68.26 points or 0.24%, to 27940.64, while the CNX Nifty lost 25.45 points or 0.30% to 8,357.85.