Markets to extend the somber run with a soft start

The Indian markets suffered sharp cut in last session as the rupee continued its relentless declining trend and remained above the psychological level of 55 per dollar mark for the second consecutive day, almost nearing to 55.50 mark. Today, the start is likely to remain soft as the global developments are not giving any positive cues, though some recovery can be expected in the latter part of the day depending on the sentiments in the European markets. Rupee too is likely to stabilize and can help the market from sliding further. There is likely to be some support from Organisation for Economic Cooperation and Development’s (OECD) outlook report observation that India's economic growth is likely to rise to more than 7.5 percent in calendar year 2013. However, the commodities stocks are likely to remain under pressure; also the microfinance companies may keep buzzing as the government brought before Parliament the much-awaited microfinance bill, which allows the RBI to regulate the sector and cap interest rates.

There will be some important result announcements as well. BHEL, Canara Bank, Chennai Petro, JB Chemicals, Mangalore Refinery, REC, Tata Global and Tech Mahindra are among the many to announce their numbers today.

The US markets closed on a flat note with some indices losing marginally, the good economic news from the housing front got offset in late trades on concern of Europe that the leaders there may consider Greece’s exit from euro. The Asian markets have made a weak start with majority of the indices witnessing cut of over a percent as euro and commodity stocks fell ahead of a European Union summit to talk about Greece exit.

Back home, Indian stock markets seem to have taken a turn for the worse this Tuesday with the benchmark equity indices being in the league of their own, plunging about a percentage points and significantly underperforming their global counterparts. The frontline gauges not only surrendered their early gains in the session but halted their three session gaining streak. It was turning out to be a choppy session of trade with the frontline indices trading in an extremely tight range in the first half with gains of around half a percent. However, the psychological 16,300 (Sensex) and 4,950 (Nifty) levels proved as tough nuts to crack for the key indices which failed to sail beyond those levels despite repeated attempts.  A sudden wave of selling pressure emerged in early afternoon trades and the frontline indices showed a freefall of sorts in mid noon trades tracking the downslide in rupee which grinded lower to the lowest levels seen in Indian history against the dollar for the fifth successive day amid concern about slowing domestic growth and continuing global uncertainty.  The anemic rupee’s ruthless fall continued despite RBI’s repeated attempts to rein its depreciating run. Investors are growing increasingly nervous over the beleaguered currency’s slide as they fear that Indian Reserve Bank is expending the already scanty forex reserves for a losing cause. Domestic markets failed to soar in tandem with the rally in global markets as the depreciating rupee concerns marred investors’ appetite for riskier asset classes like equities. The local markets collapsed around two percentage points from the high point of the day in sharp contrast with the Asian markets where most equity indices surged over a percent, while the benchmarks in Europe too traded with significant gains in the session. Market participants were seen squaring off hefty positions from the Metal counter, which got pounded by close to two percent and remained the top laggard in the space. Also, the rate sensitive Banking and Realty pockets bore the brunt of hefty selling pressure and sank by over a percent each. On the other hand, buying was evident in the IT and TECk counters following the rupee’s sharp depreciation as the software and technology exporters stand to gain from stronger dollar. Finally, the BSE Sensex lost 156.85 points or 0.97% to settle at 16,026.41, while the S&P CNX Nifty declined by 45.55 points or 0.93% to close at 4,860.50.