Markets likely to make a bounce back in early trade on positive regional cues

The Indian markets plunged further in the last session and all the efforts of government to rejuvenate the investors sentiments were washed out in global economic concern and the reversal in the domestic currency markets. Today, the start is likely to be in green and markets may recover some of their last two session’s lost ground, however there might not be an uptrend immediately. There will be some concern too, as the IMF has sharply lowered its forecasts for India and predicted “less buoyant” growth in the near- and medium-term for Asia. The IMF has said, India, Asia's third-largest economy is expected to grow 4.9 percent this year, down from a forecast in July of 6.1 percent. Though, Finance Minister P Chidambaram has vowed that the pace of reforms will remain “strong and unabated” as he promised a credible plan for the economy's fiscal consolidation. The Iron companies are likely to see some action on report that mines minister Dinsha Patel has asked finance minister to immediately roll back the export duty on iron ore from 30% to 15%. The telecom stocks too may remain buzzing after EGoM decided that all GSM operators will have to pay a one-time fee for the remaining period of their 20-year licence for beyond 4.4 Mhz spectrum, while operators using CDMA technology will have to pay for all spectrum over 2.5 Mhz.

The US markets continued their declining trend with the start of new week and traders remained cautious ahead of the earning season starting from Tuesday, also the trading remained light owing to the Columbus Day holiday for the US government and the bond market. The Asian markets have mostly made a positive start, with Chinese and Hong Kong markets surging by over a percent on speculation that China will add to measures to boost growth after IMF cut its global economic growth forecasts.

Back home, stock markets in India, after witnessing cut of over half a percent due to flash crash, continued their south-bound journey for second day in a row with frontline indices settling below their crucial 5,700 (Nifty) and 18,750 (Sensex) levels with a butchery of over 1.20 percent amid weakness in global markets. Key domestic indices, after a flat start, tried to stick near their pre-close levels but, what happened in second half was one way slide of the markets to the lowest levels on the back of selling pressure visible in the heavyweight pockets. Shares of Reliance Industries (RIL) remained under pressure after Morgan Stanley cut its rating to ‘underweight’ from ‘equal-weight’, citing lack of near-term triggers, expectations for weaker refining margins and valuation. The US investment bank also cited concerns about RIL’s investments into businesses that offer ‘low’ return-on-equity, as well as a subdued outlook on petrochemicals. The selling intensified in late trade following weakness in European counters, which fell in early deals as investors looked towards a meeting of euro-zone finance ministers for further clues as to whether Spain will request a bailout, while worries about Greece’s next aid tranche also weighed. Back home, Finance Minister P Chidambaram tried to soothe the investors’ worries about passing of different FDI bills and said that he will approach the opposition for the same. Some support also came in from telecom space as stocks like, Bharti Airtel, Idea Cellular and RCom edged higher after the EGoM, headed by Finance Minister P Chidambaram considering levy of a one-time spectrum fee, decided to send all its recommendations to the Cabinet, which is expected to take up the matter on October 16. It was also decided that one-time fee will be charged from all telecom companies having spectrum beyond 4.4 MHz. Moreover, housing finance firms like Dewan Housing Finance, HDFC, LIC Housing Finance and GIC Housing Finance rallied after the Securities and Exchange Board of India raised the ceiling for investment in debt securities of housing finance companies by debt-oriented mutual funds. Finally, the BSE Sensex shaved off 229.48 points or 1.21% to settle at 18708.98 while the S&P CNX Nifty plunged by 70.95 points or 1.23% to end at 5,676.00.