Markets likely to get a flat-to-cautious start of the new week

The Indian markets made a flat but negative close on the last trading session. There was some buying in the final hours that helped the markets make a smart recovery from the lows of the day. Today, the start of the new holiday truncated week is likely to remain cautious, traders will be eyeing the inflation data to be announced later this week  and the pace of economic growth amid majority of India Inc pegging growth in the range of 6-6.5 per cent for 2012-13. There is threat of India getting a downgrade to its sovereign rating, Fitch Ratings has said that possibility of downgrading the country’s sovereign rating is more than 50 per cent in the next 12-24 months. However, Prime Minister Manmohan Singh after Moody’s forecast to downgrade India’s GDP has said that no doubt it is a cause of concern, but this did not mean that the country would not be able to do better that better last year’s 6.5 per cent growth. Today, there will be lots of stock specific actions to keep the markets buzzing. Maruti Suzuki might lift the lockout at its Manesar plants and restart production from this week, while there will be lots of result related actions, Godrej Industries posted 38 per cent growth and Kingfisher Airlines has posted loss of Rs 651 crore in April-June, compared with a loss of Rs 264 crore a year earlier.

There will be lots of other important result announcements today, Aditya Birla Chemicals, Alembic, Alok Inds, Bharati Shipyard, Birla Cotsyn, Educomp Sol, Edserv Soft, Esaar India, Glaxosmithkl Pharma, Jindal Poly, Lanco Infra, NMDC, Pfizer, Selan Explorations will be announcing their numbers.

The US markets continued their bullish trend on Friday and managed to end modestly higher, though economic news from China weighed on the sentiments but hopes of traders increased that now the central banks across the globe will be going for stimulus measures to revive economy. The Asian markets have made a mixed start with some of the indices trading lower by about half a percent. Though, the Japanese market was trading up but the GDP of the country slowed, adding to signs of a deepening global slump.

Back home, key Indian benchmark indices showcased buoyancy in last leg of trade and managed to end the session near their pre-close level as investors went for bargain hunting on hopes of some progress on pending economic reforms. Moreover, dismal IIP data for June also raised pressure on the policymakers to take decisive action to revive economic growth. Though, the bourses traded in the red for most part of the day’s trade. The benchmark equity indices not only went on to accumulate weekly gains of over two percent but also managed to regain their psychological 17,550 (Sensex) and 5,300 (Nifty) levels. After the weak opening, selling got intensified mostly led by fall in shares of State Bank of India (SBI). The stock fell over four percent as bank’s gross non-performing assets (NPAs) rose to 4.99% in the April-June quarter as against 3.52% in the same quarter previous year while net NPAs increased to 2.22%. Though, the PSU bank has registered a surge of 136.91% in its net profit at Rs 3751.56 crore for the quarter under review as compared to Rs 1583.55 crore for the same quarter in the previous year. The sentiments were also bashed by auto space, which remained one of the top losers as car sales in India witnessed a slow growth of 6.7% in July at 1.43 lakh units, the slowest in nine months and less than the industry estimates, as high interest rates and increase in excise tax weakened the demand. However, the downside remained capped as buying was witnessed in software and technology pack. Stocks like Tech Mahindra, HCL Technologies, Tata Consultancy Services and Mahindra Satyam edged higher in the trade after better than expected US economic data on August 9, 2012, and on a weak rupee. Moreover, FMCG stocks also remained in demand, with Hindustan Unilever (HUL), ITC and Bajaj Corp hitting record high and Tata Global Beverages hitting 52-week high. Finally, The BSE Sensex lost 3.13 points or 0.02% to settle at 17,557.74, while the S&P CNX Nifty declined by 2.55 points or 0.05% to close at 5,320.40.