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

The Indian markets that seemed bucking the global trends initially, lost its momentum and ended with cut of around a percent in last session. Today, the start is likely to be a gap-down one and Nifty will retest the 7700 level in very early trade tailing feeble global cues. However, all eyes will be on the mint street as the RBI Governor Raghuram Rajan will come out with the fourth bi-monthly monetary policy of the current fiscal later in the day, a 25 bps repo rate cut is already being factored in, anything more than that will cheer the markets and can lead to recovery, while if the expectations are not met the fall can deepen. Markets will be getting some support with Finance Minister Arun Jaitley’s statement that he is confident of maintaining fiscal deficit at 3.9 per cent in the current financial year and extremely keen to better the 7.3 per cent growth of fiscal year 2014-15. Meanwhile, worried over continued decline in exports, the Commerce Ministry will hold a meeting of exporters on October 7 to discuss ways to contain the dip in the outbound shipments. Banking stocks will be in action, as the Finance Minister has said that government is open to dilute its stake in public sector banks to 52 per cent and promised more steps to tackle bad loan problems including those involving state power providers. The sugar stocks too will keep buzzing, as the Indian Sugar Mills Association (ISMA) has revised downwards sugar production estimates by a million tonnes to about 27 MT for the marketing year starting next month.

The US markets slumped in last session on weak global cues; especially disappointing economic data out of China, which once again raised concerns about the health of the global economy. On the domestic front too, a measure of strength in the housing market unexpectedly declined for August. The Asian markets have made a weak start with some of the indices trading lower by 2-3 percent in early deals. The commodity stocks are suffering deeper rout led by Glencore Plc, which dropped by a record in Hong Kong.

Back home, Monday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percent. After a cautious start, the domestic bourses traded listless for most part of the session but, sharp decline in late trade dragged key gauges below their crucial 25,700 (Sensex) and 7,800 (Nifty) levels. Investors remained on sidelines ahead of the Reserve Bank of India’s (RBI) monetary policy review on Tuesday. Though, the expectations are high from RBI’s governor Raghuram Rajan to cut its key repo rate to a four-year low to support the domestic economy at a time when consumer inflation is at a record low. The sentiments also remained under pressure with a survey by the Boston Consulting Group and apex industry chamber Confederation of Indian Industry stating that at present rate of government’s ambitious ‘Make in India’ initiative, its target of creating 100 million jobs and achieving 25 percent of GDP from manufacturing sector by 2022 may be difficult to meet. Investors failed to draw any sense of relief with Niti Aayog vice-chair man Arvind Panagariya’s statement that the economy is now in a much better shape than before and backs the idea of aggressive rate cuts. He said that growth rate has turned around and shows signs of acceleration. Inflation is well within the target zone, indirect tax revenues have been buoyant and investor confidence is much improved. On the global front, European markets made an awful start, while Asian markets ended mostly in red. The rate-sensitive counter banking traded higher for most part of the day, but gave up all the gains to end in red terrain with a cut of over half a percent. On the flip side, stocks related to Fertilizer sector traded with traction on a report that the government is planning $83 million debt waiver for fertilizers and chemicals companies. Finally, the BSE Sensex plunged by 246.66 points or 0.85% to 25616.84, while the CNX Nifty declined by 72.80 points or 0.93% to 7795.70.