Markets likely to get a weak start on sluggish global cues

The Indian markets managed a flat but positive close in last session though traders remained cautious ahead of the major economic events later in the week. Today, the start is likely to be weak on the back of sluggish global cues and the local indices may lose some of their gains in early trade. The pharma stocks are likely to see movement on report that Health Ministry is working on new rules to ensure the availability of medicines at affordable prices in the local market and may put tougher conditions for foreign pharmaceutical companies looking to acquire Indian drugs businesses. The airline stocks may see some upmove, as the Minister for Civil Aviation Ajit Singh had written to the Oil Ministry on declaring aviation turbine fuel (ATF) as a notified product, which may decrease the burden of fuel cost on airlines. The auto sector too may remain buzzing as the car industry is demanding a revival package that includes a cut in excise duty and resumption of government purchases. The metal and mining companies too will be in focus after the Goa state government ordered mining industry to shut all operations until further orders, effective from Tuesday. Goa has 90 operational mines of the existing 337 mining leases.

The US markets closed lower on Monday on getting weak economic data from both domestic as well as global front. Traders opted to book some profit ahead of the big Fed meeting. Technology pack was weighed down by the weakness in Intel shares after various brokerages cut price targets on the chipmaker. The Asian markets have made a soft start and barring one or two, all indices in the region were trading in red.

Back home, after vehemently surging around two and a half percent in previous two sessions, Indian equity benchmarks went on to consolidate the gains in Monday’s session by settling just above the neutral line. It turned out to be a range bound session for the frontline indices which somehow managed to stick on to the levels reached on Saturday, as investors at large chose to play the waiting game ahead of a series of developments both from the domestic as well as global front which will pave the way forward for the local bourses. Marketmen awaited the release of industrial production (IIP) data for July, amid speculations that IIP might edge up 0.3 percent year on year in July, after shrinking 1.8 percent in June, which was the third contraction in four months. Traders also remained cautious ahead of August headline inflation figure slated to be released on September 14. Inflation remains above the comfort level of the government, as well as the Reserve Bank. The new data will provide key inputs for a decision on interest rates ahead of RBI’s monetary policy review on September 17, 2012. Investors also preferred cashing some profits on worries that further delays in fiscal reforms from the government would prevent the central bank from lowering interest rates. Global market too remained extremely quite with European indices trading flat amid concern about slowdown in top economies such as the US, China and Japan. Back home, metal stocks provided strength to the key benchmarks as metal shares like NMDC, Hindalco, Sail, Tata Steel, JSW Steel and Sterlite Industries edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange, jumped 3.01 percent on September 7, 2012. Moreover, Auto space too remained one of the top gainers after Petroleum Minister Jaipal Reddy stated that state-run oil companies don’t have an immediate plan to increase the prices of fuel products such as gasoline and diesel despite their mounting revenue losses. The BSE Sensex gained 17.13 points or 0.10% to settle at 17,766.78, while the S&P CNX Nifty rose by 4.75 points or 0.09% to close at 5,363.45.