Markets to witness good recovery after the big fall

The Indian markets suffered their biggest cut ever in points terms in last session, spooked by concerns about the global economy, with no support from the domestic front, traders even overlooked the assurance of RBI governor and Finance Minister of economy withstanding firmly despite global rout. Today, the start is likely to be positive and recovery can be seen immediately, as indicated by the global mood. Traders will be lapping up good shares at attractive valuation after last session’s sharp fall. Marketmen are likely to pay some heed to Finance Minister’s statement that the economy is in a revival phase and hint that it will clock a growth rate in excess of 8 per cent in 2015-16, after the total indirect tax collections during the first four months of the fiscal rose by 37 per cent. Traders will also be getting some encouragement with the SBI Composite Index report that has stated that Country's manufacturing sector growth improved both in terms of month-on-month as well as yearly basis in August. There will be some buzz in the media stocks after the cumulative provisional winning price for the e-auction of private FM radio Phase III channels touched Rs 1,134 crore at the end of the 21st day of bidding.

The US markets despite coming off their day’s low ended with sharp cuts in the last session, the global sell off led the US markets to their worst session in years, there was some fight back by bluechip stocks but finally all the major averages ended lower by over 3%. The Asian markets are showing signs of recovery and some of the indices have gathered good gains, though the Chinese market has extended the steepest rout since 2007, on concern the government is paring back support for the market.

Back home, Monday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 7,850 (Nifty) and 25,800 (Sensex) levels, following fears of a slowdown in the Chinese economy on expectations of tapering demand for goods and services worldwide going forward. After a gap-down opening, the domestic bourses never looked in recovery mood and ended the trade near ten months lows with a huge cut of around six percent, making it the biggest crash in about seven years on a global rout and the third biggest-ever for the BSE benchmark index. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, oil and gas and power. Depreciation in Indian rupee too dampened the sentiments. The rupee slumped to its lowest since September 2013, adding to the panic of the investors, as the depreciation in the rupee hits foreign investors and diminishes their returns. Investors failed to get any sense of relief after Reserve Bank of India Governor Raghuram Rajan’s statement, who said the central bank will not have any “hesitation” in using foreign exchange reserves to reduce currency volatility. Rajan said that relative to other countries India is in a good position with strengthening growth, a low current account deficit and narrowing fiscal deficit, moderating inflation, low short term foreign currency liabilities and very size-able exchange reserves relative to imports and liabilities. Selling got intensified after European markets made an awful start, while the Asian markets had ended in deep red. Back home, sentiments remained dampened and shares of oil and gas companies witnessed selling pressure with some of them hitting 52-week lows after concerns over sluggish economic growth in China led to sell-off in global commodities. Further, Iran’s plans to boost crude oil production in an effort to boost market share also dampened sentiment. Additionally, metal stocks too declined despite FM stating that the nation's steel sector needs to be strengthened and preserved, as consumption of the product will increase with the Indian economy growing. Finally, the BSE Sensex plunged by 1624.51 points or 5.94% to 25741.56, while the CNX Nifty dropped by 490.95 points or 5.92% to 7809.00.