Markets to make a somber start on weak global cues

The Indian markets lost their way completely in the final hours of last session and slumped by around a percent despite better than expected earnings from IT major Infosys, mainly on profit warnings by Sun Pharma, higher bad loans for HDFC Bank and weaker-than-estimated earnings by Hindustan Unilver. Today, the start is likely to be somber on sluggish global cues and the local markets are likely to extend the decline in early deals, and Nifty may retest 8500 level. Traders will be cautious with a report from private research firm stating that the underlying business sentiment in India during July-September quarter of calender 2015 is likely to remain subdued amid concerns of weak factory data and potential impact of deficient monsoon. There will be some buzz in the telecom stocks, as the telecom department has written to telecom operators to take steps to optimise radio frequencies in their networks and analyse the reasons for call drops, and report back to the government on the action they have taken to deal with the matter by July 31. However, there is good news for foreign investors, as with the introduction of composite cap in foreign investment policy, portfolio investors can invest up to 49 percent in multi-brand retail and e-retail companies without government approval. There will be lots of important result announcements too, to keep the markets in action.

The US markets ended lower in last session in negative reaction to earnings news from some blue chip companies. The Asian markets have made mostly a soft start led by decline in technology and telecommunications-services stocks after IBM reported a drop in sales. The Japanese market too was trading down, as the yen strengthened against dollar.

Back home, Tuesday turned out to be a daunting session for the Indian equity indices which got pounded by around a percentage point after the Parliament’s first day of monsoon session failed to impress traders. Final hour of trade proved to be the curse for the markets and bourses settled below their crucial 28,200 (Sensex) and 8,550 (Nifty) levels. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade. Investors remained concerned as monsoon session of the Parliament that begun today is expected to be volatile as the opposition likely to target the government over multiple scandals that erupted in the recent past. Disruptions spoiled the proceedings and Rajya Sabha was adjourned thrice on the first day and Union finance minister Arun Jaitley said the opposition does not want to let the monsoon session of Parliament run. Investors also shrugged off better than expected Infosys’ Q1 numbers. The company has reported 4.99% rise in its net profit at Rs 3030 crore for the quarter ended June 30, 2015 as compared to Rs 2886 crore for the same quarter in the previous year. It has also upped dollar revenue growth for 2015-16. After several quarters the company raised its US dollar revenue guidance from 6.2-8.2% in dollar terms to 7.2-9.2%. On the global front, European counters traded higher in early deals, while Asian markets ended mostly in green. Back home, selling in healthcare counter weighed down sentiments with Sun Pharma contributing the most to the losses after the drug maker said its profit might be adversely impacted in financial year 2015-16. FMCG space too witnessed selling pressure owing to weak Q1 results of HUL. Finally, the BSE Sensex plunged by 237.98 points or 0.84% to 28182.14, while the CNX Nifty declined by 74.00 points or 0.86% to 8529.45.