Markets likely to get mild soft start; may recover once the trade progress

Indian equity indices added another half a percent of cut to their deteriorating morale in last session. Rupee plunged to its all time low and sentiments turned extremely weak. All the high beta sectors suffered sharp cuts in the range of 1-3 percent and selling intensified in all other sectors too. Today, the start is likely to be soft-to-flat, though after suffering sharp plunge in last couple of days recovery can be expected. But all eyes will be on the weakening rupee, which suffered its worst one day falls against the dollar in recent times. The Indian currency is the worst performing currency in Asia in 2012. The weakness of the rupee is not only depleting the value of FII investments when measured in dollar terms, but on the same time, is also impacting importers negatively. Meanwhile, there will be some jitters related to the suggestion of House panel to put more checks on funds coming into stock market. The parliamentary standing committee on finance, in its report on the 'Prevention of Money Laundering Amendment Bill, 2011', has suggested setting up a coordination mechanism between Securities and Exchange Board of India and the Reserve Bank of India to curb the flow of tainted money in the stock market.

There will be lots of important result announcements to keep the markets buzzing. Apollo Tyres, Cadila Healthcare, Canara Bank, Cipla, Escorts, Jain Irrigation, Jubiliant FoodWorks, Lupin, NTPC and Sintex Industries are among the many to announce their numbers today.

The US markets plunged further with Dow extending its losing streak for the sixth consecutive day. Though, there was some recovery in late trade on news that Greece will get 5.2 billion euros in aid but the concerns of political uncertainty in Greece and Spain's weak banks continued weighing on the sentiments. The Asian markets have made a mixed start with some of the indices marginally trading in red, as the Bank of Korea held off from altering borrowing costs for an 11th month after inflation eased, however positive earnings outlook from different companies was helping some of the indices.

Back home, stock markets in India continued to sulk for second straight session on Wednesday as the benchmark equity indices fail to stage a relief rally a day after being bludgeoned by over two percent. The frontline gauges not only suffered around half a percent cut but also slipped below important psychological levels of 5,000 (Nifty) and 16,500 (Sensex) levels, which happened for the first time in more than four months. The domestic bourses went through a volatile trading session as the key equity indices flip-flopped around the previous closing levels for most part of the session. The frontline indices showed mild recovery in late morning trades and were trading in an extremely tight range around the previous closing levels. However, nervous market participants turned jittery in early noon trades following the European stock markets which after a flat to positive opening, slipped into the negative terrain as the uncertainty over European debt trouble was far from over since Greek leaders were busy in cross-party talks to form a government, and the chances for a coalition slim. Stock markets across the Asian region went back to their losing ways on Wednesday with most equity indices ending lower by half to one percent. Political uncertainty in Greece intensified concerns over Europe's onerous financial trouble and undermined investors’ morale. Deepening the feeling of instability a staunch leftist is likely to stitch together a coalition government with the aim of tearing up Greece's bailout agreements, a move that would spark a dangerous escalation of the Euro-zone debt crisis.  Back home, the concerns from money market showed little signs of dying down as the anemic rupee slipped closer to 54 against the US dollar despite recent measures from the central bank to support the beleaguered currency. The high beta Realty and Metal counters too bore the brutal brunt of hefty selling pressure in the session. However, the gains in defensive - FMCG and IT counters did their bit by capping losses for the benchmark equity indices. Finally, the BSE Sensex lost 66.60 points or 0.40% to settle at 16,479.58, while the S&P CNX Nifty declined by 25.15 points or 0.50% to close at 4,974.80.