The Indian markets remained in a consolidation mood in last session, the sluggish global cues and lack of any further triggers from the domestic front kept the traders on sideways and the markets closed lower by about half a percent. Today, though the US market cues are not good but the local markets are likely to get a slightly positive start. Not only the power sector stocks but the whole market is likely to cheer the government approval for a bailout of cash-strapped power distributors. The Rs 1.9-lakh crore debt restructuring for power distribution companies, is the second such move in less than a decade. The move is also likely to benefit private power producers, who in the absence of payments, were operating below capacity and were facing difficulties in paying their installments to lenders. Markets are also likely to get some support from Prime Minister’s Economic Advisory Council Chairman C. Rangarajan’s statement that Indian economy’s growth rate would pick up in the second half of this fiscal and will touch 6.7 per cent for 2012-13. However, there will be some somberness in the sugar stocks, as the government has deferred decision on scrapping subsidy on levy sugar under the public distribution system (PDS) quota.
The US markets closed lower, however there were good earnings announcements from housing sector but the concern of Europe overshadowed them, as German business sentiment slipped for a fifth consecutive month in September and added to concerns on the prospects of the global economic growth. The Asian markets have made a mixed start with some of the indices trading in red, though gains in financial shares was supporting the markets in the region after China said it will take more steps to support its financial market.
Back home, after witnessing sharp gains in the previous session, Indian equities snapped the trade near day’s lows as market participants preferred to take some profit off the table. It was a lackluster start to the F&O expiry week for the month of September, where lack of buying interest combined with bleak global cues sent Dalal Street below its psychological 18,700 mark in the late trade. The gauges traded choppy throughout the session as some sense of cautiousness was drawn after international rating agency Standard & Poor’s cut India’s GDP forecast to 5.5%. Earlier, Indian rating agency CRISIL too had slashed its forecast for the country's GDP growth to 5.5% from 6.5% earlier. HSBC has also cut growth forecast for fiscal 2012-2013. The Planning Commission recently lowered the annual average economic growth rate to 8.2% for the 12th Five Year Plan period (2012-17) from 9%. Global cues too remain subdued as European counters traded in the red terrain in the early deals as investors confidence was weighed down by concerns that the debt crisis faced by the euro zone is intensifying. Back home, FMCG pack also pressurized the markets, losing by about one and half a percent on profit booking after strong gains over the past couple of months. Hindustan Unilever, ITC and Colgate Palmolive shed between 1-2.5 percent. Selling in software space too dampened the sentiments as rupee continued its gaining streak against the dollar, inching closer to 53 levels on dollar selling by exporters. However, losses remain capped as realty stocks extended recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country. The government had last week braved intense political opposition to notify the rules for allowing 51% foreign direct investment (FDI) in multi-brand retail. Some amount of support also came in after shares of power generation, transmission and distribution companies and power equipment makers extended their last week's gains on speculation that the Union Cabinet at its meeting on September 24, 2012, will clear a proposal to restructure the debt of state electricity boards (SEBs) and power distribution companies (DISCOMS) to revive the ailing sector. Finally, the BSE Sensex lost 79.49 points or 0.42% to settle at 18,673.34, while the S&P CNX Nifty declined by 21.55 points or 0.38% to close at 5,669.60.
