Another gap-down start on cards tailing wobbly global cues

The Indian markets despite late hour volatility managed to post some gains in the last session, though there was not much on the positive side but the traders went for some bottom fishing and value buying. Today, the start is once again going to be sluggish and the indices are again expected to see a gap-down opening, the global weakness is likely to continue weighing down the sentiments. All eyes will be on the movement of rupee that has depreciated to a record low despite likely intervention of the RBI. The bleeding PSU oil marketing companies may rejoice as the international crude prices continued their slide for the sixth day. Also, the export oriented stocks may get some boost as the government is likely to offer incentives on exports of labour-intensive items and is also planning to reward exporters who opt to diversify into new markets as part of its different measures to revive the country’s flailing export sector.

There will be some scrip specific actions to keep the markets buzzing, based on their earnings number. Alok Inds, Coal India, Deepak Fertilizers, Karnataka Bank, Manappuram Finance, Panacea Biotech, SBI, Tata Steel, Torrent Pharma and TV Today are among the many to announce their numbers today.

The US markets slumped again on weak economic data and worries of the Euro zone. S&P posting a fifth straight day of declines, came near to breach the 1300 mark once again. Worries about the future of the euro continued to dominate the markets and traders opted to book whatever profit they can. The Asian markets have made a weak start with most of the indices trading lower by around two percent on signs of worsening European crisis and weak economic reports from US. Japanese Nikkei was suffering cut of about two and half a percent as the yen rose against dollar.

Back home, it turned out to be a volatile session of trade for stock markets in India, which registered their second positive close in last three sessions on Thursday. Though, the frontline equity indices’ quarter percent gains appeared marginal when compared to the notable gains amassed by their peers in Asian region, however, it looked prominent in the face of the sharp sell-off seen in European counterparts. The domestic bourses had capitalized on the initial momentum after the gap up opening but lost their direction in afternoon trades post European market opening. The benchmark equity indices that were trading with over a percent gain in mid morning trades trimmed most of it and touched the lowest levels in the mid noon session. Supportive cues from Asian markets provided the much needed support to local markets in first half. Investors’ morale got buttressed on the back of reports that the world’s third largest Japanese economy expanded at a faster than expected rate of 1% in the first quarter of 2012. The encouraging Japanese GDP data came after US data showed overnight that industrial production in the world’s largest economy climbed more than forecast in April, indicating that global economic recovery is not as slow as thought earlier. However, disappointing cues from European market took their toll on domestic sentiments in second half and pummeled the frontline gauges below the important psychological 4,900 (Nifty) and 16,100 (Sensex) levels. Investors resorted to profit booking following the decline in European markets as apart from Greek political instability, fresh concerns over ECB’s denial to provide liquidity to some undercapitalized Greek banks until they sufficiently boost their capital, dissuaded investors from riskier asset classes like equities. Moreover, concerns from the money market showed little signs of waning as after showing strength earlier in the session, the rupee depreciated to fresh historical low levels. On the BSE sectoral space, buying was witnessed in the defensive - FMCG counter which topped the chart with close to two percent gains followed by the high beta Realty pocket that surged around a percent. Finally, the BSE Sensex gained 40.39 points or 0.25% to settle at 16,070.48, while the S&P CNX Nifty rose by 11.95 points or 0.25% to close at 4,870.20.