Markets to get a gap-down start on weak global cues

The Indian markets showed a choppy trade in last session, finally ending with cuts of about a quarter percent. Today, the start is likely to be a gap-down one tailing the weakness in the regional peers, as Greece looked set to default on its debt repayment this week. There will be some cautiousness with the observation of the Bank for International Settlements (BIS), who raising the red flag over interest rates remaining “extraordinarily low” globally has said that easy monetary regimes are resulting in a build-up of financial vulnerabilities. However, traders will be getting some solace with the Indian Meteorological Department (IMD) stating that the South-west Monsoon has covered the entire length and breadth of the country, way ahead of schedule in a year that saw a forecast of deficit rainfall for India. The Pharma stocks will be in action, as the government plans to set up Rs 500 crore venture capital fund to boost domestic pharma industry and provide cheaper loans to entities looking to establish or upgrade manufacturing facilities. There will be some pressure on the aviation stocks, as the government has rejected a move by budget carriers to charge for check-in baggage.

The US markets made a mixed closing in last session, though the sentiments remained cautious ahead of the European finance ministers scheduled meet on June 27. The Asian markets have made a weak start with some of the indices trading lower by around two percent on concerns of Greece rescue, although the European Commission offered Greek voters a 10-point plan for bailout requirements on Sunday. The Chinese market too was in red despite the People’s Bank of China cutting interest rates during the weekend.

Back home, benchmarks ended the first day of new F&O series on weak note on Friday as Greece has again failed to reach an agreement with its creditors and stumbled towards a default. Markets traded in red terrain throughout the session despite making couple of futile attempts to enter into green terrain and ended with a cut of around quarter a percent. Sentiments remained dampened after the central bank’s stress test surprisingly showed private banks are likely to see a significant jump in bad loans. The RBI also said that the probability of slippage of state electricity boards' exposure to bad loans is very high considering the implementation of new regulatory norms effective April 1, 2015. The ability of India's debt-burdened firms to repay has worsened as leverage has increased, straining a banking sector burdened by bad loans. Meanwhile, RBI’s Governor Raghuram Rajan has asked central banks from across the world to define ‘new rules of the game’ as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s. Global cues too remained somber with European markets trading lower in early deals, while Asian markets ended mostly lower. Back home, Buying in Software pack too aided the sentiments after global management consulting, technology services and outsourcing giant Accenture raised its full year revenue growth forecast for the third time in a year. Additionally, stocks related to media counter too remained on buyers’ radar on report that the government is discussing a proposal for increasing FDI limit in the media sector from the current 26 per cent to attract foreign investments. Finally, the BSE Sensex declined by 84.13 points or 0.30% to 27811.84, while the CNX Nifty lost 16.90 points or 0.20% to 8381.10.