Markets to make a flat start, likely to move higher in early trade

The Indian markets continued their decline in last session and lost another half a percent, with major indices slipping below their crucial psychological levels. Today, the start is likely to be cautious tracking flat trading of Nifty futures on the Singapore Stock Exchange, but some recovery can be seen in the very early trade of the penultimate session of F&O series expiry, on short covering and value buying after a slew of decline. Though, traders will be concerned with Reserve Bank India (RBI) Governor Raghuram Rajan’s statement that lack of good economists is impacting policy-making in the country. Meanwhile, the union Cabinet is likely to approve a new Consumer Protection Bill 2015 that seeks to replace the existing law and proposes setting up a regulatory authority to curb unfair trade practices. There will be some buzz in the banking and financial sector, as the RBI governor will meet with representatives of asset reconstruction companies (ARCs), private equity (PE) firms and banks to discuss ways to improve the management of distressed assets. Power stocks too will see some action on a rating agency Crisil Ratings’ report stating that the unviable power generation and distribution sector could jeopardise loans worth nearly Rs 2.65 lakh crore if issues plaguing these sectors are not resolved soon. There will be lots of result reactions based on the earnings announcements too, to keep the markets in action.

The US markets rallied in last session, bouncing back from recent weakness in a positive reaction to the latest earnings news from some big-name companies. The Asian markets have made a mixed start, with Chinese market fluctuating between gains and losses, though speculation of state buying has offset waning interest by retail investors and margin traders.

Back home, extending their losing streak to fourth straight session, Indian equity benchmarks ended the choppy day of trade with a cut of one third of a percent on Tuesday as investors remained on sidelines ahead of the July month’s expiry in the derivatives segment on Thursday coupled with fears of foreign money leaving Indian shores after government proposed to look into the Special Investigative Team’s stringent norms on participatory notes (P-notes). Markets turned choppy after a positive start with benchmarks moving in and out of the red, but selling which emerged in last leg of trade, dragged the major indices below their crucial 8,350 (Nifty) and 27,500 (Sensex) levels. The investors remained jittery over the reports that the central bank might keep the interest rates unchanged during its next bi-monthly policy review meeting, which will be held on August 4 on account of poor monsoon season so far. Sentiments also remained dampened after washout of the first week of the monsoon session in Parliament. However, losses remained capped after Finance Minister Arun Jaitley’s assurance that the government will not take any action that may jeopardise investment climate and the government would apply its mind on the recommendations in due course and would avoid any decision that could hurt investor sentiment. Meanwhile, President Pranab Mukherjee has expressed his hope that given the macro economic prospects, Indian economy will regain growth rate of over 8% soon, as the macroeconomic parameters like inflation and external sector balance have improved in the past year. Appreciation in Indian rupee too provided some support. Rupee was trading at 63.94 per dollar at the time of equity markets closing compared with its previous close of 64.16. On the global front, European markets traded in green in early deals, while Asian markets ended mostly in red. Back home, Selling in metal counter too weighed down sentiments on the back of weak commodity prices coupled with weakness in the China shares.