Indian markets likely to make a flat-to-positive start

The Indian markets went through a one way slide in the last session, the moderately positive start finally ended with a cut of over half a percent, barring the oil & gas and defensive FMCG sector, none of the sectoral indices showed any resistance. Today, the start is likely to remain cautious, though some recovery too can be expected after last session’s decline. However, the trade may remain range bound with lots of local and global development scheduled at the weekend. The telecom sector is likely to remain buzzing with the Supreme Court extending the deadline for the auction of 2G spectrum to January 11, 2013. There is some cheer for the small retail investors as the Sebi has proposed no-frills demat accounts for retail investors to achieve wider financial inclusion. As per Sebi’s proposal, there will be no charges for holdings worth up to Rs 50,000 in the proposed Basic Services Demat Account (BSDA) and for value of holding from Rs 50,001 to Rs 2,00,000, the annual maintenance charge will be up to Rs 100. However, there will be buzz in power companies, as the Coal Minister Sriprakash Jaiswal has said that more coal blocks could be de-allocated based on the periodic review by an Inter-Ministerial Group. So far 25 blocks had been de-allocated. The IMG was reviewing the performance of the 58 allocated coal blocks.

The US markets made a mixed closing on Monday, as the traders remained cautious, hoping for hints about further monetary stimulus from the Jackson Hole, Wyo. economic summit this weekend. The Asian markets have made a mixed start with only few of the indices trading marginally in green. Japan downgrading its economic assessment for the first time in 10 months amid slowing growth in China and on speculation that Federal Reserve Chairman Ben S. Bernanke will refrain from introducing fresh stimulus measures this week, was weighing on the regional markets sentiment.

Back home, Indian equity markets started the August F&O expiry week on a rough note with Sensex breaching crucial 17,700 mark and snapping the day’s trade near its intraday lows. The markets traded in the blues throughout the session in the absence of any positive trigger, both in domestic as well global markets. The sentiments mainly got butchered in the noon session due to political deadlock over the comptroller and auditor general (CAG) reports. Selling got intensified in power and infra space after opposition party, besides hitting out at Prime Minister’s statement on coal controversy, sought cancellation of allocated coal block. The market-men also remained cautious ahead of GDP data schedule to be released on August 31, 2012. Rate sensitive sectors like, banking, realty and capital goods once again remained the top laggard as hopes of a rate cut by the central bank faded as inflation continues to remain way above its comfort zone of 5%. The sentiments also remained under pressure after the Reserve Bank of India (RBI) said that growth deceleration in Indian economy have been led primarily by a 46% dip in new investments in large projects. Metal shares were down on concerns that demand would be lower on the back of weakening economic scenario in China after government data showed that profits of major industrial enterprises declined by 5.4% in July. The sentiments also remain dampened as public sector undertaking BPCL, HPCL and IOC all edged lower after international crude oil prices went higher on supply worries due to likely interruption of US offshore oil production in the Gulf of Mexico by Tropical Storm Isaac. Moreover, the rupee dropped to 1-week low in low volumes, with pair at 55.60/61 versus Friday’s close of 55.49/50. It rose to as much as 55.63 in trade, the highest since August 20. However, losses remain capped as some respite came from FMCG pack, which edged higher on reports of revival of monsoon rains this month. Rainfall up to August 22, 2012 was 14% below normal, reflecting a significant improvement from 29% below normal at end-June and 19% below normal at end-July. Finally, the BSE Sensex lost 104.40 points or 0.59% to settle at 17,678.81, while the S&P CNX Nifty declined by 36.45 points or 0.68% to close at 5,350.25.