Markets to get a cautious start on mixed global cues

The Indian markets witnessed a dismal day of trade in last session and the benchmarks lost over a percent, with sell-off aggravating in the final hour of trade. Today, the start is likely to remain cautious, as the global cues are not very supportive and the weakening Chinese economy may put pressure on the trade. However, there will be some recovery once the market stabilizes with Nifty and Sensex attempting to reclaim their respective crucial levels of 7600 and 25000. Traders will be eyeing the Prime Minister Narendra Modi’s meeting and wide-ranging discussion on global economic scenario with business leaders as well as bankers and economists. The meeting is being held amid turbulence in global markets caused by a slowing Chinese economy, devaluation of the yuan and concerns surrounding the prospect of a US rate hike. Traders are also likely to get some support with Minister of State for Finance Jayant Sinha’s statement that the government has the fiscal space to be able to absorb additional financial burden on account of OROP, without having any impact of the fiscal deficit target, which is 3.9 percent. There will be some buzz in the shipping sector on report that the government is planning to set up low-cost non-major ports along coastline under the Sagarmala project.  

The US markets remained closed on account of Labor Day, unable to give any cues to the other global markets; however the Asian markets have made mostly a lower start led by the Japanese market despite the report that nation’s economy contracted last quarter less than initially estimated. On the same time the Chinese market was modestly in green on stimulus hopes, as China's foreign exchange reserves fell by $94bn in August and the imports declined.

Back home, Indian barometer gauges witnessed bloodbath with both the major indices losing over one and half a percentage points and ending below their crucial 7,600 (Nifty) and 24,900 (Sensex) levels on lingering worries over China slowdown. 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 healthcare, metal and banking. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade as investors offloaded their positions on account of mixed US jobs data which failed to give clarification regarding the Fed rate hike. Sentiments remained dampened after Indian Meteorological Department (IMD) said that overall monsoon deficit has widened to 13% of long-period average even as the southwest monsoon began its withdrawal. Investors failed to draw any sense of relief from the IMF’s 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. Traders also failed to draw any solace 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. On the global front, European counters traded in green in early deals, while Asian markets ended mostly in red. Back home, depreciation in Indian rupee against dollar too dampened the sentiments. Slump in metal counter too played spoil sport for the Indian equity markets. Shares like Jindal Steel, Vedanta, Hindalco and NMDC edged lower by 3-5% post Chinese revision of annual economic growth rate in 2014 to 7.3% from the previously released figure of 7.4%. Finally, the BSE Sensex plunged by 308.09 points or 1.22% to 24893.81, while the CNX Nifty declined by 96.25 points or 1.26% to 7558.80.