Markets likely to make a soft start of the F&O series expiry day

In the last session, Indian markets went through one way slide that ended only with the closing bell, there was across the board profit booking and investors fearing further weakness in local and global economy, opted to take profit off the table. Today, is the expiry of the August F&O series, though it has been a good series registering gain of around five percent, but the broader markets has suffered a lot and the lots of individual shares nosedived. Markets are likely to make a somber start today, though the trade is likely to remain volatile and lots of short covering may pull the markets higher in the latter part of the day. Though, traders will be eyeing the global development at the weekend but the first quarter GDP numbers scheduled to be announced on Friday, too may make the sentiments cautious, also the RBI’s governor stating that high inflation and wrecked government finances leave little room for either the central bank or the government to throw policy lifeline, is likely to put the rate sensitives’ in cautious mood. There will be some buzz in the auto sector, as the government has approved the roadmap for facilitating large-scale use of eco-friendly electric vehicles, including hybrids, by 2020. India target to produce 6 million green vehicles by 2020, of which 4 to 5 million are expected to be two-wheelers and the government will be pumping in Rs 23,000 crore for eco-friendly vehicle production.

The US markets ended modestly in green, though the trade remained cautious ahead of the Federal Reserve Chairman Ben Bernanke's speech on Friday in Jackson Hole, Wyoming. It was the upbeat housing data that lifted the markets higher for the day. The Asian markets have mostly made a weak start with lots of indices are witnessing cut of over a percent. Weaker than expected retail sales data from Japan and report of Business confidence among South Korean manufacturers was weighing on the sentiments.

Back home, Indian equity markets continued their losing streak for the fourth straight session on Wednesday ahead of the expiry of August derivative contracts and first quarter GDP numbers slated to be released on Friday. The gauges got no respite throughout the session and snapped the day’s trade near its intraday low losing their crucial 5,300 (Nifty) and 17,500 (Sensex) levels. The concerns of further slowdown in economy and a reiteration by the Reserve Bank that inflation remained the key threat pushed the undertone lower. Most of the pressure came in from the realty pack, which tumbled over three percent led by DLF, Indiabulls and HDIL slumping for second day as worries continued over a stringent land acquisition bill from the government. The Land Acquisition Bill, which was being pushed by Sonia Gandhi-led NAC, is set for further delay with the controversial matter being referred to a Group of Ministers (GoM) because of opposition by a number of Cabinet ministers. Moreover, the sentiments were also dampened after auto stocks like Bajaj Auto, Tata Motors, Hero Moto and M&M slipped between 1-4 percent on concerns that sales growth in August would remain subdued on account of high interest rates on auto loans and rising fuel prices. The sentiments also got clobbered after banking sector, after trading in the green for most part of the day’s trade, ended with cut of about half a percent after the RBI governor reiterated that inflation remained the key threat for the economy, dashing any hopes of a rate cut in September. The RBI governor, Subbarao added that the central bank has been successful in easing price pressures by reducing the inflation rate to 7 percent from 11 percent but also pointed that various factors, including high commodity prices, the fiscal deficit and the monsoon is again pushing it higher. PSU oil marketing companies like BPCL, HPCL and IOC all edged lower on concerns about high under-recovery. PSU OMCs incurred under-recovery of Rs 47,811 crore in Q1 June 2012. Finally the BSE Sensex lost 140.90 points or 0.80% to settle at 17,490.81, while the S&P CNX Nifty declined by 46.80 points or 0.88% to close at 5,287.80.