Markets likely to get a cautious start

The Indian markets extended their consolidation mood on Tuesday and closed modestly in green. Though the global cues were supportive but the investors remained concerned about the delayed monsoon and its impact on economy. Today, the start is likely to be flat-to-cautious as the 31 percent deficient monsoon concern will linger though the Union Agriculture Minister Sharad Pawar has said that delayed southwest monsoon is a matter of concern but isn’t worrisome and production of rice crop was unlikely to be affected. The telecom stocks are likely to continue their upmove after TDSAT gave a split verdict on whether mobile operators could offer 3G services through roaming pacts. While, the rupee movement too will be watched after it surged to a six-week high against the dollar on the back of strong inflows and improved market sentiments in last session. Meanwhile, there is some good news for oil marketing companies as Kaushik Basu, chief economic advisor to the finance ministry has said that diesel prices should go on a float like petrol.

The US markets closed higher on a short session of trade on Tuesday. There was some good economic news along with soothing European environment that helped the major indices gain over half a percent. The Commerce Department said new orders for manufactured goods rose 0.7 percent during May. Most of the Asian markets have made a positive start, though the Shanghai and Hang Seng markets are suffering some profit booking despite speculation that Chinese and European central bankers will ease monetary policy, there were some reports stating that Chinese banks’ reserve requirements may be reduced three more times this year.

Back home, stock markets in India went to extend their consolidation phase this Tuesday with the benchmark equity indices hardly budging from their previous closing levels as investors lacked conviction to open fresh positions amid a lot of uncertainties surrounding the global as well as domestic markets. The psychological 5,300 (Nifty) and 17,500 (Sensex) levels proved as difficult nuts to crack for the frontline indices, which drifted lower immediately after crossing those levels. The frontline indices pruned most of their gains after hitting intraday highs in early morning session and settled on a flat note with trivial gains. The key gauges gyrated in a tight range in positive territory for most part of the day. Local markets underperformed their Asian counterparts, which settled on an optimistic note amid hopes that world’s major central banks including those in the Europe, the US and China would employ monetary easing measures to support their respective flagging economy. The European markets traded on a flat note after reports showed manufacturing around the world shrank largely because of the onerous financial trouble in European Union, however, they traded with a positive bias on hopes of central banks’ policy action to bolster growth. Back home, the upside was capped as investors remained worried over monsoons prospects as it got delayed by two weeks. Monsoon rains were 31 percent below average from June 1 to July 2, losing even more pace in the last week after being 23 percent below average to June 27. Moreover, the automobile index closed on a flat note after reports showed weak buyer sentiment continued to affect automobile sales of June and it is unlikely to improve until the festival season that begins in September. Further, stocks from the Cement sector too remained subdued after majors like ACC and Ambuja Cement reported a modest growth in production at 1.97 million tonnes and 1.78 million tonnes respectively, in June. However, stocks like Bharti Airtel and Idea Cellular from the telecom sector rallied substantially after Telecom Disputes Settlement and Appellate Tribunal (TDSAT) gave a split verdict on a challenge by mobile phone operators seeking to overturn a government order requiring them to stop offering 3G services beyond their licensed zones through mutual roaming pacts. Finally, the BSE Sensex gained 26.73 points or 0.15% to settle at 17,425.71, while the S&P CNX Nifty rose by 9.35 points or 0.18% to close at 5,287.95.