F&O expiry week to get a soft start on weak regional cues

The Indian markets declined over half a percent in last session there was anxiety among the investors ahead of the market heavyweight Reliance Industries’ numbers. On the same time, there were no supportive cues either from the global or the domestic front that could help the markets move higher. Today, the start is likely to remain sluggish and the markets may extend their downward journey in early trade. Being the F&O series expiry week the trade is likely to turn choppy. However, investors’ sentiments may soothe a bit with Finance Minister Pranab Mukherjee exuding confidence that the Indian economy would ride on its strong fundamentals and resilience to take a higher growth trajectory. Also there is good news for the FII’s regarding general anti-avoidance rules (GAAR), the government will put in place a threshold to ensure that tax payers and foreign investors don’t attract the GAAR provisions and FII’s may be provided a separate threshold for GAAR. There will be lots of important result announcements to keep the markets buzzing while the impact of results announced during the weekend too will be seen. Reliance Industries has reported its second consecutive quarterly drop in profit. The company has posted a fall of 21.21% in its net profit at Rs 4,236 crore for the quarter ended March 31, 2012 as compared to Rs 5,376 crore for the same quarter in the previous year. However, total income of the company has increased by 17.21% at Rs 85,182 crore for quarter under review.

The US markets made a mixed closing on Friday; there were some weak earnings announcements, while the global concerns kept looming large with the meeting of central bankers from the leading 20 economies. The Asian markets have made a weak start with most of the indices trading in red, some weaker earnings from the region overshadowed the IMF members’ pledge of more than $430 billion to safeguard the global economy as meetings ended yesterday in Washington.

Back home, benchmark indices failed to keep the gaining momentum going for the fifth straight session on Friday as the markets witnessed sharp kneejerk selling pressure in the dying hours of trade. Though some damage control in dying moments led the bourses recover some part of the ground lost, however, it was not enough to pull the frontline indices back into the positive terrain. The sharp drag down in stock markets in mid noon trades was suspected to be the result of a trading error after National Stock Exchange opined that they are examining the issue and declined to give further details. The 50-share Nifty plunged around one and a quarter percent within seven seconds starting 2.20 pm, to trade at 5,246.30 as the loss was triggered by a decline in Nifty futures, and was echoed in the 30-share Sensex which also fell by similar quantum. Both Nifty and Sensex recovered part of their losses shortly thereafter. Earlier, markets showed lackadaisical movements as investors lacked conviction to pile up fresh positions amid uncertain market conditions. The key equity gauges moved sideways in an extremely narrow range around the psychological 5,350 (Nifty) and 17,500 (Sensex) levels, lacking any significant upside triggers as investors indulged only in stock specific activities. The benchmark gauges were pressured by continued profit booking in the Capital Goods and Power counters, which remained among the top laggards after heavyweight BHEL once again suffered severe pounding, falling over two percent amid concerns that slack demand led India from an under-supplied to an over-supplied market for power equipment. Sentiments also were grim ahead of the earnings announcement by Sensex’ heaviest component Reliance Industries, which plunged over a percent amid expectations that the company is likely to report quarterly figures that would disappoint the Street. The drop in rate sensitive Banking and Realty pockets too hurt sentiments. On the other hand, the downside in local bourses was limited as Automobile counter gained some traction with BSE auto index rising for a seventh straight session to a new all-time high on expectations that sales will improve after the RBI’s 50 basis points cut in repo rate. The defensive FMCG index too saw some buying interest and did its bit in preventing the frontline indices from drifting to lower levels. Finally, the BSE Sensex lost 129.87 points or 0.74% to settle at 17,373.84, while the S&P CNX Nifty declined by 41.55 points or 0.78% to close at 5,290.85.