Markets likely to get a gap-down start on feeble global cues

The Indian markets suffered sharp cuts in last session, today the start is likely to be gap-down on feeble global cues. However some recovery can be expected in the latter part of the trade after the markets stabilizes. Traders will be getting some support with revenue secretary Shaktikanta Das’ statement who seeking to reassure foreign investors that it will not take any steps that “undermines the growth momentum”, participatory notes (P-Notes) “will not be banned overnight” and stakeholders will be consulted before a decision is taken, even as it was signaled that the know-your-customer (KYC) norms will be strengthened for such instruments. Also, foreign direct investment (FDI) in India during April-June this year increased by 40 percent at Rs 60,299 crore as against Rs.43,171 crore in the same period of 2014. There will be some buzz in the realty stocks, as the Reserve Bank of India (RBI) governor has said that property prices need to fall before interest rates on home loans come down, any further. The PSU oil marketing companies too will get some relief with the report that the government is not planning to raise excise duty on petrol and diesel to mop up gains accruing from oil prices that slumped to six-and- half year low.

The US markets slumped in last session on concern a decelerating Chinese economy will translate into slower global growth, with the S&P 500 tumbling to a more than six-month low and Dow falling to its lowest closing level in nearly ten months. The Asian markets have made a weak start tailing the US markets slump, with most of the indices trading with considerable losses after Chinese manufacturing gauge fell to the lowest in more than six years.

Back home, Thursday turned out to be a daunting session for the Indian equity indices which got pounded by over a percentage point as investors sold stocks across sectors amid weak global cues. After a weak opening, markets traded in tight band tad below their neutral lines but suffered sudden profit taking in last leg of trade and crashed like house of card to end below their crucial 8,400 (Nifty) and 27,750 (Sensex) levels. Selling was both brutal and wide-based as none of sectoral indices on BSE, barring FMCG and Healthcare, were spared. Counters, which featured in the list of worst performers, include realty, metal, banking and software. Sentiments remained down-beat with a private report stating that four states which produce over one-third of India’s foodgrain, and five crops that add up to more than a quarter of the production of grains and oilseeds, are vulnerable to this year’s deficit monsoons. The India Meteorological Department too has predicted that the second half (August-September) of the four-month monsoon season will see a deficit of 16% of the long-term average, while the overall deficit is likely to be 12%. Moreover, investors failed to get any sense of relief from Reserve Bank of India governor Raghuram Rajan’s statement that Indian economy is showing signs of improvement and the devaluation of the Chinese yuan was not something to be concerned about at current levels. He also added that the rural demand coming back more strongly and that would be a very tremendous bonus to Indian economy. Selling got intensified after European markets made an awful start, while Asian markets too ended in red. Back home, depreciation in Indian rupee too dampened the sentiments. Selling in metal counter too dampened the sentiments due to softening global commodity prices and concerns over slowing demand from China. Finally, the BSE Sensex plunged by 323.82 points or 1.16% to 27607.82, while the CNX Nifty declined by 122.40 points or 1.44% to 8372.75.