Markets mood to remain weak on soft global cues

The Indian markets suffered another major slump in last session, second in a row on global as well as domestic economic growth concern. Today, the start is not likely to be any different and the markets will get a soft start under influence of weak global cues. The major indices have broken their crucial psychological support levels and may slip further in short term. Though, the government has exuded confidence that Current Account Deficit remains broadly under control despite an increase during the last quarter. Finance Minister Arun Jaitley told Rajya Sabha that there is no cause for concern with comfortable forex reserves position. There will be buzz in the telecom stocks, as the Inter-ministerial panel Telecom Commission has recommended a base price of Rs 3,693 crore per megahertz for the premium 900 MHz frequency band, about 23 percent more than what regulator TRAI had suggested for the same for the spectrum auction in February. It has also said that price of spectrum in 1800 Mhz should be Rs 2,191 crore and 800 Mhz be priced at Rs 3,646 crore. However, the infra stocks may see some positive action after a private research said that construction work in 12 road projects, which were awarded in FY 2014, has started, indicating a proactive government and faster approvals by the implementing agencies.

The US markets ended mixed in last session on ongoing concerns about the global economic outlook, though major indices bounced well off their worst levels of the day. The Asian markets have made weak start, extending their sell-off for the second day, though the Chinese market after showing sign of recovery from last session’s steep fall was fluctuating, as inflation data of the country missed estimates.

Back home, Tuesday was not a very different day for the Indian markets which after witnessing their biggest fall in nearly two months in last session, lost further ground breaching some of the crucial psychological levels. The major bourses remained under pressure since beginning tailing the weakness in other global markets, while on domestic front too there wasn’t any supportive cues that could have supported the markets on upside. The global cues mainly pressured the domestic markets, the US indices gave a soft cue and Asian markets followed them amid declining oil prices and on fear that slower growth in China will keep a lid on demand for oil. Chinese markets which looked bucking the trends in early hours suffered sharp slump towards the end on tightening of collateral rules in the country. The European markets too made a weak start after data showed German imports and exports contracted in October. Back home, the slump in the Indian markets aggravated post lunch, following the sharp decline in global markets with both the benchmarks losing more than a percent and Sensex ending below 27800 and Nifty below 8350. Apart from the weak trend in global markets, rising current account deficit (CAD) in the July-September quarter too dampened the sentiment. CAD widened sharply to $10.1 billion in the second quarter of FY15 due to high gold imports. Back on street the cut on the broader markets was even wider and they underperformed the benchmarks by around half a percent. On the sectoral front while all the indices ended in red, the auto sector stocks were unable to get any support from the Society of Indian Automobile Manufacturers (SIAM) report that domestic passenger car sales increased 9.52% to 156,445 units in November as compared with 142,849 units in the year-ago month. Total two-wheeler sales in November rose 4.89% to 1.3 million units, while sales of commercial vehicles rose 9.05% to 47,686 units. Vehicle sales across categories registered an increase of 5.03% to 1.6 million units. Metals gauge on the BSE was biggest loser, weighed down by the weakness in Chinese market on fear of low demand on softening economic growth. Although, there was positive news for the Indian steel companies, as the World Trade Organisation (WTO) ruled against the US which had imposed high duty on imports of certain steel products from India. It said that duty imposed by the US on the Indian steel products is 'inconsistent' with its Agreement on Subsidies and Countervailing Measures.  Finally, the BSE Sensex plunged by 322.39 points or 1.15%, to 27797.01, while the CNX Nifty lost 97.55 points or 1.16% to 8,340.70.