Markets likely to get a flat-to-positive start

The Indian markets suffered cut of about a percent in last session, weighed down by the global cues and continuously weakening rupee. The mood of the markets turned pessimistic after Prime Minister’s Economic Advisory Council chief C Rangarajan said that RBI will find it difficult to cut interest rates in its monetary policy review later in this month in absence of softening of inflation. Today, the start of the markets is likely to be flat-to-positive, tailing some gains in the regional peers. There is wide expectation that the apex bank will be going for another rate cut amid slowing growth. Meanwhile, all the industry bodies’ chief have met Rangarajan and sought hastening of pending reforms. Though, Rangarajan has said that inflation, particularly that of non-food manufacturing, if shows a decline, then there would be scope for the RBI to adopt an easier stance. However, in a good news, direct tax collections, net of refunds, increased by 47.2 per cent to Rs 84,273 crore during April-June 2012-13, against Rs 57,267 crore in the corresponding period of last financial year. There will be some stock specific actions and some result announcement too, to keep the markets buzzing.

The US markets made a subdued start of the new week following the Friday’s disappointing US jobs report. Investors were cautious ahead of the earnings season and will be closely monitoring corporate earnings for signs of how much the euro zone debt crisis has dented profits. The Asian markets have made a mixed start , though the after US market hours earnings of Alcoa that were slightly above estimates has boosted the sentiments but still some indices are in red. Chinese market was witnessing cut of about a quarter percent as country’s imports grew less than estimated in June while export growth slowed, suggesting slowing economy.

Back home, after remaining in a consolidation phase last week, the Indian equity markets snapped the Monday’s trade in the negative terrain, below their crucial 17,400 (Sensex) and 5,300 (Nifty) levels on the back of profit booking tailing weakness across the globe and Indian rupee. The Indian rupee slipped below 56 against the dollar on Monday tracing similar weakness in other Asian currencies on renewed concerns over the global economic growth. Rupee slumped to a low of 56.03 against a dollar, more than one percent down from its previous close of 55.40 on Friday. Besides, investors shifted their focus on quarterly earnings of IT biggies Infosys and TCS, and the index of industrial production (IIP) for May, which will be the key triggers going forward. Kicking off the April-June India Inc’s earnings season amongst the large-caps will be HDFC, which will announce its result on July 11, followed by Infosys, TCS on July 12 and HDFC Bank on July 13. The bourses made a lower opening tracking the weakness in the global markets and lower than expected US jobs data which was announced on Friday post the market hours. Immediately after the start, markets showcased a partial recovery in the morning trades on the back of buying in the IT and FMCG heavyweight pockets. The sentiments also got some support as shares of tyre firms extended recent gains triggered by decline in prices of natural rubber. But in the early noon session, benchmarks suddenly extended losses and touched their intraday lows tracking subdued start in European counterparts. Moreover, fall in Metal space too dampened the sentiments. In addition, power stocks fell for the second straight day on profit booking after recent strong gains. Adani Power and JSW Energy dropped 5.2% each. Lanco Infratech, KSK Energy and Reliance Infra dipped 3-4%. Meanwhile, a shortfall in India’s monsoon rains has widened to nearly 50 percent of average, and a deficient monsoon could prolong the current impasse in economic reforms. Thereafter, markets traded in narrow-range with negative bias till end, weighed down by financial shares. HDFC was down over 1.5% ahead of its results this week on concerns that profit growth could be lower on the back of sluggish demand for home loans during the first quarter. The broader indices were hammered badly with BSE Mid cap and Small cap indices down by over a percent each. Finally, the BSE Sensex lost 129.14 points or 0.74% to settle at 17,391.98, while the S&P CNX Nifty fell by 41.80 points or 0.79% to close at 5,275.15.