Markets likely to get a soft-to-cautious start on sluggish global cues

The Indian markets suffered some profit booking in last session and major indices closed lower by about half a percent. Today, the start is likely to remain soft-to-cautious and there is likely to be buzz in the market with the regulator Sebi approving a stricter insider trading regulations, aimed at making the Indian market more transparent and provide a level-playing field to all traders and investors. The regulator also settled for easier delisting rules for buying out minority shareholders, approved listing agreements to become regulations and restricted mutual fund companies with less than Rs 50 crore capital to launch only two schemes a year till they meet the capital requirement. There will be buzz in the coal and mining aspirants too with the government announcing that auction of coal blocks will be held around February 11, however the government has put in place norms to regulate the bid war and to protect power consumers from getting a tariff shock from coal block auction and cap the number of mines or quantity of reserves that goes to one entity. There will be some buzz in textile stocks as well, after revised duty drawback rates was announced by the Union Government.

The US markets ended modestly lower in last session, though the major averages were well off worst levels reached intraday.Traders reacted negatively to a report from the Commerce Department showing a drop in housing starts and release of the minutes of the Federal Reserve’s October monetary policy meeting, which suggested that the central bank was not worried about the sharp pullback seen on Wall Street. The Asian markets are mostly in red after the preliminary Chinese PMI in November came at 6 month low. However, the Japanese market was trading higher as the yen weakened against the dollar.

Back home, Wednesday turned out to be a disappointing session for the Indian equity indices which got pounded by around half a percent as investors opted to book profit in index heavyweight. Weakness in the global markets too weighed on the sentiments. Markets traded near neutral lines for most part of the day’s trade but, sharp sell-off in last leg of trade dragged domestic bourses below their crucial levels of 8,400 (Nifty) and 28,100 (Sensex). Sentiments also remained dampened after hopes of rate cut were faded after Raghuram Rajan, said that India will focus on sustainable economic growth and developed economies should do the same. These comments came a day after Finance Minister Arun Jaitley, pitching for a rate cut, underscored that lower cost of capital would provide a good fillip to the economy. Meanwhile, markets failed to draw any sense of relief from reports that Moody’s revised its outlook on India’s corporate sector to stable from negative on expectations of economic recovery and enhanced access to global capital markets. The report also factors in successful implementation of pro-market policies that will likely lead to improved corporate cash flows. Traders also shrugged off Organisation for Economic Cooperation and Development’s forecast that Asia’s third-largest economy would grow by 6.6% in 2015, up from its last forecast of 5.7% growth in May. On the global front, European markets traded mixed in early deals, while Asian markets too made a mixed ending. Back home, depreciation in Indian rupee too dampened the sentiments. Rupee were trading near 62 a dollar mark at the time of equity markets closing compared with its previous close of 61.74, due to dollar demand from oil marketing companies and importers. Sentiments also remained dampened on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 101.98 crore on November 18, 2014. However, Pharma shares ended mixed on the back of a probe initiated by the US legislature against Sun Pharma and Dr Reddy’s over the steep increase of their drug prices in the US market is set to intensify. Though, shares related to FMCG counter gained as falling inflation raised hopes of higher spending and margins. Finally, the BSE Sensex plunged by 130.44 points or 0.46%, to 28032.85, while the CNX Nifty dropped by 43.60 points or .52% 8,382.30.