Markets to make a soft-to-cautious start on weak global cues

The Indian markets had ended modestly in red in last session after a cautious trade, today the start of the new week is likely to be flat-to-mildly negative on weak regional cues and there will be concern that US Fed will raise interest rate soon after a good employment data. However, traders will be concentrating on earnings and some important macro data of industrial production and inflation to be announced later in the week, as they will be the crucial factors in deciding RBI’s next course of action. Meanwhile, Finance Minister Arun Jaitley, stressing the need for fiscal consolidation has said that governments spending more than their means could lead to capital flight and loss in value of currency. Traders will be getting some support with a survey report of CII ASCON, which has said that the economy is showing signs of a turnaround, albeit moderately, on the back of continued policy actions, implementation and enhanced business and consumer confidence. There will be some buzz in the export oriented stocks, as the Commerce Ministry, in order to give a fillip to exports has moved a Cabinet note on a proposal to provide cheaper credit access to exporters from various sectors under the interest subvention scheme. Sugar stocks too will be in action, as the Commerce Minister has said that the Government is trying to talk to different countries for clearing accumulated sugar produced in India.

The US markets despite some recovery closed modestly in last session, following the release of the highly anticipated monthly jobs data, which was widely seen as strong enough to support an increase in interest rates in September. The Asian markets have mostly made a weak start after China’s July exports plunged, though the Chinese market itself is in green on hopes of stimulus.

Back home, Indian equity benchmarks ended the Friday’s trade in red as investors remained on sidelines ahead of the release of US jobs data that could provide fresh clues to determine whether the Federal Reserve will raise interest rates in September or wait until December. In extremely volatile session, frontline gauges traded in a tight range with Sensex and Nifty swinging between negative and positive zone throughout the session but the major slide came in the last leg of trade where bourses lost their momentum completely to end lower by about a quarter percent. Marketmen remained worried with Rajya Sabha being adjourned again with no work amid protests by the opposition parties, although Finance Minister expressed his hopes of meeting GST deadline. Sentiments also remained dampened with report that Securities and Exchange Board of India (SEBI) starting crack down on offshore units of major global banks for their suspected role in manipulation of share prices in the Indian stock market. The regulator is closely looking at possible instances where share prices of companies listed in the domestic stock market are being manipulated through offshore centres of foreign banks. However, losses remained capped as some support with finance minister Arun Jaitley’s statement that conditions in India are favourable for further interest rate cuts due to low global commodity prices as well as prospects of good summer crops. Meanwhile, Labour Minister Bandaru Dattatreya said that pension fund could invest more into equities in the next fiscal year starting April by raising the current limit set at 5 per cent of total investable assets. Global cues remained sluggish with European counters making a weak opening and Asian markets ending mostly in red. Back home, the India Meteorological Department (IMD) stated that the rainfall was below normal by 26 percent over the country during the period from 30 July to 5 August 2015. Finally, the BSE Sensex declined by 61.74 points or 0.22% to 28236.39, while the CNX Nifty lost 24.05 points or 0.28% to 8564.60.