Markets to make another gap-down start on feeble global cues

The Indian markets despite attempting some recovery ended with cut of about a percent in last session. Today the start is again likely to be a gap-down one tailing the feeble global cues and the Nifty could retest 8150 level in the very early trade. Traders are likely to be concerned about an Assocham study, which has said that as many as five million jobs were lost between 2004-05 and 2009-10, paradoxically during the time when India witnessed the highest and consistent eight per cent growth in its economy. Also, the Union Minister Bandaru Dattatreya has said that retirement fund body EPFO would invest more funds in equity markets only if the performance of its investments in stocks is encouraging. However, there will be some support, with Finance Minister Arun Jaitley stating that most of the challenges faced by the Indian economy have been created by external factors, and expressing confidence in the country's strong fundamentals to withstand such transient global trends. Electronic sector will see some action with a report that government has received investment proposals totalling Rs 90,000 crore in the last two months for electronics manufacturing in the country.There will be some buzz in the banking stocks too, as increasing the competition a Reserve Bank of India (RBI) panel has recommended conversion of Urban Cooperative Banks (UCBs), which have a revenue of more than Rs 20,000 crore into regular banks. 

The US markets plunged in last session on fears about global economic growth; on the domestic front too, manufacturers continued to expand in August but the pace of growth tapered off to the slowest rate since October 2013. The Asian markets have made a weak start, with Chinese market slumping to lowest level since March, as government support measures failed to revive investor confidence. All the markets in the region were trading with considerable losses.

Back home, Friday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 27,400 (Sensex) and 8,300 (Nifty) levels with a cut of around a percentage point as sentiments remained dampened on rising concerns of a slowdown in China, lingering uncertainty in Greece amid volatility in oil and currency. After a gap-down opening markets traded in tight band for most part of the day’s trade and found it difficult to rebound due to sustained selling by foreign funds and retail investors. Markets made a decent attempt to recover in last leg of trade supported by buying in pharma and FMCG counters but could only managed to wipe out a portion of losses suffered in the early trade, as traders remained concerned about the global growth lacking any major cues. Depreciation in Indian rupee mainly weighed down sentiments. The rupee was trading at its weakest since September 2013 at 65.83 down by 30 paise since China devalued its yuan on August 11 along with weakness in the local equities. Investors failed to get any sense of relief 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. On the global front, European markets made weak start, while Asian markets ended lower. Back home, investors failed to draw any solace with Railways Minister Suresh Prabhu’s statement that the Indian economy can double in three years and has the potential of becoming a $20-trillion economy. Finally, the BSE Sensex plunged by 241.75 points or 0.88% to 27366.07, while the CNX Nifty declined by 72.80 points or 0.87% to 8299.95.