Markets likely to get a positive start on supportive global cues

The Indian markets lost about half a percent in last trade, though the start was good but market could not keep their momentum going and lost their way in last leg of trade after remaining range bound for the entire session. Today, the start is likely to be on a positive note, taking cue from the global markets. On domestic front too, the news are supportive with MSCI increasing the country's weightage in its emerging market index to 6.4% from 6.3%, which is likely to entice the foreign institutional investors (FIIs) to increase their exposure in the country. Also, the Commerce and industry minister Anand Sharma indicated that the government may announce some decisions on FDI in multi-brand retail and civil aviation, saying all consultations are over and an announcement is likely soon. There is also likely to be buzz in the markets after regulator Sebi made several changes to the rules governing MFs, IPOs and fund distributors, making mutual fund investments more expensive but at the same time guaranteed minimum number of shares to retail investors during an IPO. In stock specific actions, SAIL and Sterlite Industries are being moved out of the National Stock Exchange’s benchmark index Nifty, and will be replaced by Lupin and UltraTech Cement with effect from September 28, 2012. The Oil marketing companies too, may strengthen on the buzz that government is likely to increase diesel prices by Rs. 5 per lite shortly after the Parliament sessions ends.

The US markets surged once again on Thursday, taking S&P to a four-month closing high. There were some good corporate earnings and comments from German Chancellor Angela Merkel, supporting European Central Bank's efforts to fight the euro zone crisis. Most of the Asian markets have made a positive start on positive news from the US. Japanese market was up by over half a percent on report that US housing permits reached a four-year high, the most since August 2008.

Back home, after showcasing decent performance in the previous two sessions, Indian frontline equity indices resumed southbound journey on Thursday’s session registering their first negative close for the week. Indian markets remained closed on Wednesday on account of Independence Day. Benchmark indices, after getting a positive start today, failed to extend the gaining momentum as investors lacked conviction to take larger bets and snapped the range-bound session with a loss of a tad over 0.30 percent. However, the psychological 5,350 (Nifty) and 17,650 (Sensex) levels have once again proved as tough nuts to crack for the frontline indices as they failed to sail beyond those levels. Worries of deficient rain and draught like situation also kept markets under pressure; rice production is poised to slump from a record, as the worst monsoon since 2009 has reduced planting. The pressure also came from currency market as Indian rupee fell for the fourth straight session to a two-week low against the US dollar on Thursday on increased demand for the US currency. The rupee fell 39 paise to 56.04 to the dollar in early trade after the US currency strengthened again. Moreover, fall in public sector undertaking (PSU) oil marketing companies (OMCs) like BPCL, HPCL and IOC too dampened the market sentiments as Crude prices surged on Wednesday, touching their highest level since May on report of steep drop in US oil stockpiles and fresh tensions in the Middle East. Also, there were hopes for further stimulus from major central banks to support the weakening global economy that helped the prices move higher. The main pressure came in from FMCG counter and it lost over two percent as below normal monsoon triggered profit booking after recent rally. However, the losses remain capped by rally in Auto space, which rose over half a percent on hopes that the central bank will find more space to ease monetary policy after inflation based on the wholesale price index eased in July 2012. Finally, the BSE Sensex lost 70.99 points or 0.40% to settle at 17,657.21, while the S&P CNX Nifty declined by 17.40 points or 0.32% to close at 5,362.95.