Markets likely to make a cautious start of new week

The Indian markets witnessed a flash crash in last session, with Nifty plunging by around 900 points within moment due to some erroneous trade. Today, the start is likely to be cautious, taking cues from global markets and traders will wait till trade shows sign of stabilization. The telecom stocks will be buzzing, as the Empowered Group of Ministers led by Finance Minister P Chidambaram will be meeting today on the Spectrum issue; it will take a decision on charging telecom service providers for excess spectrum beyond contractual obligations. The housing finance companies are likely to get a boost with latest SEBI’s decision to relax the investment limit for such entities in debt mutual funds. The SEBI has also allowed foreign institutional investors (FIIs) to re-invest 50 per cent of their previous year’s debt limit in the current year. The steel companies too, may see some action as the Finance Ministry has imposed definitive anti-dumping duty on flat products of stainless steel imported from South Korea, EU and the United States of America.

There will also be lots of scrip specific actions to keep the markets buzzing. Civil Aviation Minister Ajit Singh has said that Kingfisher Airlines would have to satisfy the DGCA on all aspects, including safety, surety of continuation of hassle-free operations and clearance of dues. While, the petroleum ministry has rejected RIL’s plea of any immediate revision in gas price before April 2014. RIL has sought more than a three-time increase in the price of natural gas being produced from its KG-D6 field on the eastern coast.

The US markets closed marginally in red on Friday, though the unemployment rate declined below 8% for the first time since President Barack Obama took office but there was caution ahead of the third quarter earnings season. Most of the Asian markets have made a soft start and most of them are trading lower by quarter to half a percent ahead of a meeting by European finance ministers later in the day to discuss the region’s debt crisis.

Back home, Snapping their five days winning streak, Indian equity indices ended the session in the negative terrain with both the bourses tumbling below their crucial 5,750 (Nifty) and 19000 (Sensex) levels. The gauges, despite a firm start, went into a tizzy on Friday after couple of trading errors on Nifty pressed the panic button momentarily, resulting sharp fluctuations in the key stock indices. The NSE circuit filter got triggered due to entry of 59 erroneous orders which resulted in multiple trades for an aggregate value of over Rs 650 crore. These orders had been entered by a trading member Emkay Global Financial Services on behalf of an institutional client. These non-algo market orders were entered for an erroneous quantity which resulted in executing trades at multiple price points across the entire order book thereby causing the circuit filter to be triggered. Earlier, the markets opened higher for the sixth consecutive session on Friday following Cabinet’s clearance to FDI in insurance and pension, and encouraging comments by ECB President Mario Draghi. But, the undertone turned cautious, as the markets seemed to have already reacted to the news of impending Cabinet nod for those reforms. Further, selling in banking stocks too dampened the sentiments as the RBI governor D. Subbarao reiterated that inflation was not at a comfort level and at its forthcoming policy meeting on October 30, 2012, a few more measures are expected to be announced to rein in inflation. Markets traded in the tight band but, in red till end as software and technology stocks got butchered badly through the session after the rupee rose near its six-month high, after the government took more reform measures to attract foreign investment. Selling in public sector oil marketing companies too dampened the sentiments. Stocks like BPCL, HPCL and IOC all edged lower after US crude oil futures surged 4.1 percent overnight. However, positive global cues helped domestic indices to recover losses up to some extent as European counters traded with traction in early deals ahead of the closely watched US nonfarm payrolls report. Finally, the BSE Sensex lost 119.69 points or 0.63% to settle at 18938.46, while the S&P CNX Nifty declined by 40.65 points or 0.70% to close at 5,746.95.