Markets to make a weak start on tepid global cues

The resilient Indian equity markets surged in last hour of previous session and made gains of around a percent despite gloomy global outlook. There was good short covering in the rate sensitives that led the markets higher for the day. Today, on the last trading day of the week the indices are likely to get a gap-down start under impression of weak global cues. The market sentiments are likely to remain weak as there is nothing on domestic front too, that can support the markets. The downgraded of 15 of the world's biggest banks by Ratings agency Moody's is likely to have its spill over impact on the Indian banking stocks too. The cement stocks are likely to remain under pressure after the CCI levied a penalty of nearly Rs 6,300 crore on 11 cement companies. ACC, Ambuja Cements, Ultratech, India Cements, Madras Cements, Century Cements, Binani Cements, Lafarge India and Jaypee Cements, all these companies were found in violation of the provisions of the Competition Act, 2002 by CCI. The telecom stocks too are likely to show subdued trend as the much-awaited EGoM meeting headed by Finance Minister Pranab Mukherjee, to finalise a base price for sale of spectrum, was deferred indefinitely. However, there may be some spurt in retail related stocks, as the Commerce and Industry Minister Anand Sharma has said that political consensus is building over allowing foreign direct investment in multi-brand retail in the next few days.

The US markets suffered massive sell-off on Thursday with major indices plunging to witness their worst single day drop in last three weeks on getting weak manufacturing data and after Goldman Sachs made a bearish call on the S&P 500 index. The losses intensified in the late hours on expectations that Moody’s plans to announce its long-anticipated downgrades of 15 global banks. The Asian markets have made a weak start and all the indices are down by half to one and half a percent, erasing most of their weekly gains on weak economic reports from US. South Korea’s Kospi Index fell the most after its currency slid from a five- week high.

Back home, stock markets in India once again showcased high degree of resilience on Thursday as the benchmark equity indices finished a choppy session on a sanguine note. The benchmark gauges displayed a strong performance by vehemently garnering close to a percentage point and the sharp rally looked even more prominent given the fact that the gains came on a day when equity indices around the world suffered heavy pounding after the FOMC only gave a moderate extension of Operation Twist while it abstained from announcing quantitative easing measures but left the door open for QE3. While European counterparts too traded on a weak note, as investors cashed in on a four-day rally after getting a batch of weak economic data from China and Germany. With the sharp upmove, the frontline indices not only surpassed the psychological 5,150 (Nifty) and 17,000 (Sensex) levels but also extended the gaining streak for the third straight session. After getting off to a flat to positive opening, the markets traded in close proximity with the previous closing levels for most part of the day as cues from the Asian space remained sluggish. However, just when it was like the markets would go on to extend their consolidation phase, key gauges bounced back sharply and started a northbound journey, which only halted with the close of session. The tentative recovery in investors’ appetite for riskier asset classes like equities surfaced after an influential investment bank upgraded domestic equities to overweight from its earlier neutral call on Indian equities, citing a number of factors including historic valuations, expectations for monetary stimulus, lower oil prices, and a weak rupee. Moreover, stocks of PSU oil marketing companies like HPCL, BPCL ONGC etc rallied sharply as international crude oil prices slumped. The rupee too recovered to some extent after hitting all fresh historical lows in the session and provided some much needed support to the markets. However, the upside in domestic markets got capped to some extent after heavyweight Reliance Industries got pounded by over two and half a percent on renewed concerns over gas output after Canadas Niko Resources slashed the reserve estimate at the KG D6 gas block, in which both companies hold stakes. Finally, the BSE Sensex gained 135.93 points or 0.80% to settle at 17,032.56, while the S&P CNX Nifty rose by 44.45 points or 0.87% to close at 5,165.00.