Markets to extend the somberness with a soft start

The Indian markets went through mayhem in last session, with the major indices not only suffering cut of over 2 percent but dipping below their respective crucial levels, sliding to their weakest level in more than a year. Today, the start is likely to be somber and further selling can be seen in initial trade tailing the weakness in the regional peers. However, some recovery can be expected in the latter part of the trade taking cues from the IMF statement that India is among the few bright spots in the global economy, at the meeting of G20 Finance Minister and Central Bank Governors where they also discussed monetary policy uncertainties. Finance Minister Arun Jaitley too has said that factors like the Chinese devaluation of yuan and the US Fed's likely interest rate hike are "transient" and it will be only the real economy that will dictate the currency rate fluctuations and markets in India. Also, the FM has promised a rational tax regime and easier business environment and asked Turkish industry leaders to invest in India including in smart cities, textiles, food processing and renewable business sectors. Traders will also be getting support with government stating that it wants an extended Monsoon session so that the Constitutional amendment GST bill can be approved and has also appealed to Congress to support the key reform to accelerate the country's growth. There will be some buzz in the telecom stocks on reports that Department of Telecom may go slow for auction of spectrum next year if operators do not invest in infrastructure to make optimum use of available airwaves and improve quality of services.

The US markets suffered another sharp cut in the last session with the major averages declining by over a percent on getting mixed economic data. The Asian markets have made mostly a lower start of the new week, though the Chinese markets was altering between gains and losses coming after a long holiday despite nation’s statistics bureau revising 2014 GDP growth to 7.3% from 7.4%.

Back home, Friday turned out to be a disappointing session for the Indian equity indices which got pounded by over two percentage point as investors sold stocks across sectors amid global growth worries. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near 14 month lows, breaching their crucial support levels of 25,250 (Sensex) and 7,700 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included realty, infrastructure and power. Sentiments remained downbeat after exporters’ body FIEO has said that the decline in outbound shipments has “pulled down” India's GDP growth in the April-June quarter by over 3 percent. Investors failed to get any sense of relief with Minister of State, UAE stating that United Arab Emirates is keen to invest in India, especially in opportunities arising out of various initiatives announced by the government such as ‘Make in India’ and ‘Digital India.’ Market participants also failed to draw any sense of relief with report that the government receiving over Rs 1 lakh crore investment proposals for manufacturing in the electronics sector. Sluggish global cues too dampened the sentiments with European counters making an awful start, while there was sharp sell-off in the Asian peers. Back home, depreciation in Indian rupee too dampened the sentiments. Selling in banking counter too dampened the sentiments after a credit rating agency said in a research note that the Reserve Bank of India's (RBI) draft guidelines on computation of base rate, if implemented in its current form, will adversely impact profitability of Indian banks. Finally, the BSE Sensex plunged by 562.88 points or 2.18% to 25201.90, while the CNX Nifty declined by 167.95 points or 2.15% to 7655.05.