Markets to remain in somber mood with a weak start

The Indian markets got embroiled in global sell-off and lost considerably in last session, today the start is likely to be weak tailing feeble global cues. However, markets may see some consolidation in the latter part of the trade and some recovery too can be expected after witnessing sharp fall in last two sessions. Traders will be getting some support with National Statistical Commission (NSC) chairman Pronab Sen’s statement that the new GDP numbers are not flawed and Central Statistics Office (CSO) is following the correct methodology for computing national accounts and is on the right track. Also, the government’s indirect tax collections in July 2015 grew 39.1 per cent over their levels in July last year, bolstered by significant growth in excise and service tax collections due to changes in the tax rates. Though, metal stocks will continue to remain under pressure but some buzz is likely to be seen in the metal and mining sector, as on the first day of third tranche of coal mines auctions government garnered a total of Rs 2,529 crore from bidding of two blocks in Chhattisgarh and Maharashtra. The export oriented stocks are  likely to remain in somber mood, as the exporters' body FIEO has said that India’s exports will be hit and the trade deficit might widen after the devaluation of Chinese currency yuan.

The US markets reversing their gains plunged in last session, amid a negative reaction to news of People's Bank of China’s surprise move to devalue its currency. The move not only raised concerns about the Chinese economy but the possibility that it could start a currency war. The Asian markets have made a weak start with many of the indices suffering severe cuts, as China’s currency tumbled for a second day and raised concern that financial-market volatility in the world’s second-largest economy will curb global growth.

Back home, Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percentage point as investors remained worried on continuing logjam over the GST Bill. After a cautious start, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 27,900 (Sensex) and 8,500 (Nifty). Selling was both brutal and wide-based, barring IT and TECk, none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included metal, realty and banking. Sentiments remained dampened as the Rajya Sabha once again failed to take up the GST Bill as the Congress and the Left parties blocked the proceedings demanding External Affairs Minister Sushma Swaraj’s resignation over Lalit Gate. Sentiments was also hit with Moody's report which stated that India’s sovereign credit profile is more exposed to the negative effects of a drought than most other Baa rated sovereigns because of relatively high share of agriculture in overall employment, weak rural infrastructure and irrigation, inefficient food distribution, large proportion of Indian household spending that goes towards food, and share of food subsidy costs in the government's fiscal deficits. Selling got intensified after European counters made a weak start, while all the Asian markets ended in red. Back home, depreciation in Indian rupee too weighed down the sentiments. Metal and tyre stocks remained under pressure after the yuan devaluation, the People’s Bank of China (PBoC), the country’s central bank cut the yuan’s reference rate by a massive 1.9%-the most on record. Finally, the BSE Sensex plunged by 235.63 points or 0.84% to 27866.09, while the CNX Nifty declined by 63.25 points or 0.74% to 8462.35.