Markets likely to get a soft start of penultimate F&O expiry session

The Indian markets, after a round of volatility and amid a range bound trade in last session, managed to end modestly higher, though the euphoria of SEBs debt restructuring led to profit booking in the power and banking stocks. Today on the penultimate day of F&O September series expiry, the start is likely to be soft tracking sluggish global cues. Traders may get some support with Chief Economic Advisor Raghuram Rajan’s statement that India’s recent reforms measures has changed international perception about the country for the better and is likely to  reverse the downward trajectory of economic growth and could help avert a credit ratings downgrade. However, there will be scrip specific movements that will keep the markets buzzing for the day, Maruti Suzuki, settling its wage issue with the Gurgaon plant workers has hiked salaries by an average 75%, while the UB group companies too will be in limelight after announcement that United Spirits (USL) and the group’s holding company, United Breweries (Holdings), were in talks to sell a stake in USL to the world’s largest liquor company, Diageo Plc.

The US markets plunged on Tuesday as the concern of Europe and weak outlook of multinational manufacturer Caterpillar weighed on the positive economic developments amid statement of Fed official that QE3 may not meaningfully boost economy. The Asian markets have made a soft start on concern that stimulus announced by different central banks may not be sufficient to stop the slowing global economic growth. The Japanese market was leading the pack of losers despite a meeting of foreign ministers of China and Japan in New York in an attempt to ease rising tensions over a territorial dispute that is hurting trade between the two countries.

Back home, Indian markets, despite sluggish global cues, managed to conclude the session slightly in the green after the government unveiled a bailout package for the troubled power sector. Bourses, throughout the session, traded in the tight band, with crucial levels of 18,750 (Sensex) and 5,700 (Nifty) proving to be tough nuts to crack, as market participants closely awaited the government’s market borrowing calendar for second half of current fiscal scheduled to be released within this week. Power stocks remained on the buyers radar after the Cabinet Committee on Economic Affairs (CCEA) approved the package, which would restructure the debt of distribution companies by asking state governments to take over half of their short-term debt, with the remaining to be rescheduled by lenders. The Rs 1.9-lakh crore debt restructuring for power distribution companies, is the second such move in less than a decade. The package for power DISCOMS also boosted confidence of banks, which had exposure to these state electricity distribution (SEB) companies rising to 5-13% of their respective books. Banks like SBI, ICICI Bank, Kotak Mahindra Bank, Bank of Baroda, PNB and HDFC Bank are traded higher. Confidence of the market participants also remained higher on reports suggesting that the PMO is all set to unleash measures aimed at boosting sectors such as industry, energy, finance and infrastructure. Markets also got 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. 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, with the government allowing up to 51% foreign direct investment in multi-brand retail trade.  Finally the BSE Sensex gained 21.07 points or 0.11% to settle at 18,673.34, while the S&P CNX Nifty rose by 4.30 points or 0.08% to close at 5,673.90.