Markets to make a weak start tailing feeble global cues

The Indian markets regained the momentum in last session on some positive comments by RBI governor and signs of normal monsoon. Today, the start of the new week is likely to be soft tracking the mood of the global markets after Greece overwhelmingly rejected conditions of a rescue package from creditors on Sunday, which may lead to a rise in risk aversion in the equity markets across the globe. Traders will also be reacting to the Socio Economic and Caste Census results, which painted a grim picture of the rural India, highlighting that one out of three families living in villages is landless and depends on manual labour for livelihood. Markets may see some stabilization in latter part of the trade after reacting to Greek development and will be getting some support with report that although investments in new projects came off in the three months to June, but for the fifth consecutive quarter stalled projects have fallen with the ‘unstalling’ being faster for government projects. Traders will also be getting some encouragement with Finance Minister Arun Jaitley’s statement that policy reforms and 8-10 per cent economic growth are a must to eliminate poverty. There will be some buzz in the exports oriented stocks, as the DGFT has said that Indian exporters need to look for opportunities outside the troubled Euro Zone to minimise risks.

The US markets remained closed in last session unable to give any cues to the other global markets. The Asian markets have made mostly a lower start, with many of the indices trading lower by around a percent, as Greece voted against accepting further spending cuts and tax increases in an unprecedented referendum. However, the Chinese market bucking the global trends was trading higher after posting their biggest three-week slump since 1992.

Back home, Indian equity benchmarks ended the Friday’s session in green with a gain of around half a percent with frontline gauges ending above their crucial 28,000 (Sensex) and 8,450 (Nifty) levels. Markets after making a cautious start gained momentum and traded in green throughout the session as sentiments remained up-beat with Reserve Bank of India’s (RBI) Governor Raghuram Rajan stating that growth is recovering and investment is picking up; he however, maintained a cautious stance on inflation expectations, but said that our growth prospects are good and the buffers that we have are reasonable, including foreign exchange. He also said that India’s exposure to Greece is limited and there will be little impact of the fallout. The sentiment was also boosted by better-than-expected progress of the monsoon, with Skymet, a private weather agency, sticking to its forecast stating that Monsoon will be normal in July. Moreover, investors shrugged off report that Services sector has extended the contraction trend for the second straight month in June, with new orders declining for the first time in 14 months. The Nikkei Services Business Activity Index posted 47.7 in June, down from 49.6 in May to its lowest level since March 2014. The index remained below the crucial 50 mark, which separates growth from contraction, for the second straight month. On the global front, European counters edged down towards their biggest weekly fall in two months on Friday, while Asian markets ended mostly in red. Back home, Stocks related to Auto pack remained on buyers’ radar post June auto sales numbers. However, metals’ stocks remained under pressure on slowdown in the Chinese economy with Shanghai Composite closing 6% lower as Beijing’s several stimulus measures failed to garner the investor’s confidence. Finally, the BSE Sensex surged by 146.99 points or 0.53% to 28092.79, while the CNX Nifty gained 40.00 points or 0.47% to 8484.90.