Markets likely to get a flat-to-cautious start of the day

The Indian markets witnessed sudden and sharp selling in last hour of trade to close flat with a negative bias in the preceding session. Lots of agencies revising their estimates lower for the country’s growth forecast weighed on the sentiments and led to selling. Today, the mood is likely to remain cautious in early trade, marketmen will be eyeing the global development  and the domestic industrial production (IIP) data for June for further cues. Also, ahead of the IIP numbers, industry body FICCIs survey has depicted lack of optimistic about high manufacturing growth in the second quarter. On domestic front rupee movement too will be eyed as the government has stated that despite taking a number of fiscal and administrative measures to contain the price spiral, it was the rupee depreciation that had been contributing to inflationary pressures. There is bad news for the retail stocks too, as government’s claims of securing a consensus on opening up multi-brand retail to foreign direct investment (FDI) has went flat, as only one state and 3 UTs  uptill now have given their written affirmation for it.

However, there will be lots of important result announcements to keep the markets buzzing. Alembic Pharma, Apollo Tyres, BS Transcomm, Claris Lifesciences, Eicher Motors, Elder Pharma, Gati, GMR Infra, Great Eastern Shipping, HPCL, IFCI, Indian Oil Corp, Jindal Stainless, Kingfisher Airlines, Motherson Sumi and NELCO are among the many to announce their numbers today.

The major US markets managed a flat close on Wednesday, with Dow and S&P extending their gaining streak for yet another day. The volume remained thin and the traders waited with hopes for action from the European Central Bank and Federal Reserve. The Asian markets have made a mixed start and the Chinese market was trading marginally down despite the Consumer Inflation Easing for fourth straight month, however other indices in the region are showing good uptick as the falling Chinese inflation has created more room for further policy easing in the world’s second largest economy.

Back home, key Indian stock indices surrendered almost the entire intraday gains in the final hour of trade, with the BSE’s Sensex and the NSE’s Nifty snapping the session near their pre-close level. The bourses exhibited strong run for most part of the day’s trade on hope that the government will go forward with the reform measures as Vice Presidential elections are over. Moreover, comments from Union Finance Minister P Chidambaram early this week that he intends to shortly unveil a path of fiscal consolidation, aided gains on the domestic bourses as the barometer indices hit their highest level in more than 20 weeks. But, the markets witnessed brutal turnaround in last leg of trade which came in the wake of a sharp reversal in the European markets. The European stocks fell from a four-month high and the euro weakened on the back of earning disappointment and German exports dropped more than expected. German exports fell 1.5% in June from the previous month. Back home, sentiments remained subdued after rating agency CRISIL cut India’s Gross Domestic Product (GDP) growth forecast to 5.5 percent for financial year 2012-13 from 6.5 percent earlier. In addition, Citigroup and CLSA also slashed their outlook for growth to 5.4 percent and 5.5 percent respectively in the fiscal year ending March. Furthermore, a weak monsoon, high interest rates, increasing twin deficits, stubborn inflation and policy impasse at the Centre too dampened the sentiments. The regular disruption of the Parliament on the first day of monsoon session also created doubts over the government’s ability to push through key economic bills. The downside of the bourses in today’s trading session remained capped mainly on account of uptick of market bellwether Reliance Industries, which amassed gains of over half a percent after management committee for the D6 field in Krishna-Godavari (KG) basin on August 7 conditionally approved the budget and work programmes for the field that have been pending for the last three years. The BSE Sensex lost 1.22 points or 0.01% to settle at 17,600.56, while the S&P CNX Nifty declined by 1.30 points or 0.02% to close at 5,338.00.