Another soft start on cards tailing sluggish global cues

The Indian markets along with their regional peers witnessed sharp sell-off in last session, the global concerns continued to be the main focus, though there were some domestic jitters too that prompted investors to book profit. Today, the start is likely to be soft-to-cautious as the global cues continue to remain sluggish, though government might get some comfort on the political front as one of its allies NCP has put off its decision on pulling out of the government at the Centre for now. Also one of the reasons that pulled the markets lower in last session, FDI in retail seems to be stabilizing on report that there is no change in plans of government to notify the cabinet decision taken last year on FDI in multi-brand retail due to the opposition. There is likely to be some jitter in the derivative market as market regulator Sebi has hiked the benchmark liquidity level for any scrip to be eligible for trading in the derivatives segments. There were some good result from the FMCG sector stocks and they may remain buzzing, HUL, Dabur and Colgate have reported 20% jump in their first quarter sales. OMCs will be in lime light after they raised petrol prices by at least 70 paise per litre effective midnight.

There are some important result announcements today too, to keep the market ticking. Ashok Leyland, Canara Bank, Jindal Steel, LIC Housing Finance, Lupin, Pidilite Inds, Sesa Goa, SKF India, Wipro etc will announce their numbers today.

The US markets extended their losses in the new week on some disappointing corporate news and after new sovereign concerns emerged from Spain, along with additional Greek drama, sparking sell-off in the markets. Most of the Asian markets have made a weak start, trading lower by about quarter to half a percent after Moody’s Investors Service cut the outlooks for Germany, the Netherlands and Luxembourg to negative, further aggravating European concern. Japanese market was losing the most as yen strengthened.

Back home, Indian markets went through a roller coaster ride on the start of the F&O expiry week, both the major indices lost over one and half a percent and closed near their two months low, breaching major crucial support levels, 17,000 (Sensex) and 5,200 (Nifty) on puny global cues. Since the start of the trade markets remained under pressure of weakness in the global markets, as the Asian markets made an extremely weak start after Chinese central bank adviser forecast an economic slowdown and on renewed concern that Greece may not meet its bailout targets. A gap-down start of markets never looked in recovery mood and continued sliding till last, closing near the lowest point of the day. Though, the Presidential elections got over and it was expected that the governments will go for a big round of reforms but the European concerns along with the hangover of insufficient monsoon rains weighed on the sentiments. Also, the reform hopes got a setback after Samajwadi party opposed the foreign direct investment in multi-brand retail, saying that FDI in multi-brand retail, if approved, will affect the local kirana stores and increase unemployment. Market-men took the Samajwadi party’s stand as extremely negative and feared that other reform measures too may get stalled with such kind of oppositions, as India needs foreign inflows for balancing the current account deficit and FDI in retail could have been one of the best bet for the government. All the retail sector stocks plunged after the news. The other sectors that lost considerably in day’s trade were metal, capital goods, realty and power. The speculation of slowing growth in China weighed heavily on the commodity stocks across the globe and the local metal index was the biggest laggard, down by around three and half a percent, while the rate sensitive realty emerged as the other big loser, down by almost three percent. The power sector too was under pressure as the ministry of environment and forests (MOEF) has proposed new rules, applicable from January 2014, seen as imposing conditions too tough to be met by the power sector. None of the sectoral gauges could manage to close in green on the BSE, while the broader indices performed a bit better, still closing down by over a percent each. The BSE Sensex shaved off 281.09 points or 1.64% to settle at 16,877.35, while the S&P CNX Nifty plunged by 87.15 points or 1.67 to close at 5,117.95.