Markets to remain in a somber mood; may see some recovery in latter trade

The Indian markets were badly butchered in the last session on P-Notes worries, amid global melt down. Today, the start is likely to be weak on sluggish global cues and lacking any major supportive factor. Though, some consolidation and recovery can be seen in latter trade, as the Finance Minister Arun Jaitley has assured investors that the government will not take any action that may jeopardise investment climate. Traders will also get some support with Chief Economic Advisor (CEA) Arvind Subramanian stating that India can grow at 8-10 percent, provided exports put up a strong show, as he pointed that International economic environment on exports is not in India's favour as Europe, Japan and China are slowing. Meanwhile, allaying the concerns that the Reserve Bank's freedom to set benchmark rates could be eroded, Minister of State for Finance Jayant Sinha has said that the government will ensure the central bank has autonomy in framing monetary policy. In other morale booster, it has been reported that India continued leading the global consumer confidence index, with the score in the second quarter of 2015 reaching the same level as in 2011. There will be lots of result reactions to keep the markets in action.

The US markets continued the decline to the new week, with the Dow ending the session at its lowest closing level in almost six months. The decline came on the heels of a sell-off by Chinese stocks, while there was some cautiousness ahead of Fed’s meeting, which can see announcement of policy decision. The Asian markets have made mostly a negative start, with the Chinese index extending the rout on concern that government intervention will fail to shore up the equity markets. However, the Hang Seng market has bounced back and was trading up by over a percent in early deals.

Back home, Monday turned out to be a disappointing session of trade for the Indian equity indices which got pounded by around two percentage points on concern over stricter norms for participatory notes coupled with slump in Chinese stock market. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 27,600 (Sensex) and 8,400 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included capital goods, metal and banking. Sentiments remained down-beat amid fears that the government may accept Supreme Court-appointed, Special Investigation Team (SIT) recommendations of stricter norms for participatory notes (P-notes) on markets. Government tried to control the damage with Finance Minister Arun Jaitley saying the government will not react in a knee-jerk manner on a report by a special investigations team that suggested greater oversight of money laundering in stocks. Jaitley, however, said the government would apply its mind on the recommendations in due course and would avoid any decision that could hurt investor sentiment. But, government’s attempt to soothe the sentiments remained unheard and the major bourses kept their southward moment to post their worst intraday fall in over a month. Selling got intensified after European counters made a sluggish start, while all the Asian equity markets too ended lower. Back home, investors also remained concerned about the Monsoon Session of Parliament resuming with continuation of the stand-off between the government and the Opposition and the Rajya Sabha getting adjourned for the day. Finally, the BSE Sensex plunged by 550.93 points or 1.96% to 27561.38, while the CNX Nifty declined by 160.55 points or 1.88% to 8361.00.