Markets likely to get a flat-to-positive start of F&O expiry week

The Indian markets fell for another day on Friday losing another two percent and the benchmarks touched their 14 months low, there was broad based selling and all the sectors were battered badly. Today, the Asian markets mood indicates that the domestic markets too will get a slight pull back in early trade and will start in green. Though, the sentiments are still week on concern of global economic recovery and the mood is also likely to remain cautious ahead of the F&O series expiry on Thursday. There might be some recovery in the IT and technology stocks, though the situation remains grim overseas, a report has indicated that top 20 outsourcing companies in India grew by 13 percent in 2010-11 and posted revenues worth Rs 32,246 crore. While, the PSU oil companies too are likely to strengthen as the international crude prices has weakened further. Recent economic events in the US and Europe have been disappointing. Europe’s drabbling debt crisis and lack of major response to the sovereign crisis and the events around lifting the US debt ceiling have negatively impacted the financial markets and substantially eroded business and consumer confidence. Furthermore, Morgan Stanley has reduced its global growth forecasts to 3.9% from 4.2% for 2011 and from 4.5% to 3.8% for 2012, that too have weighed on the sentiments.

The US markets continued their plunge and the indices snapped the fourth consecutive week of losses, investors remained cautious and avoided risky bet, while the technology pack suffered the most with a weak outlook presented by the bellwether Hewlett-Packard. The Asian markets have made a comparatively better start of the new week and barring few most of them are in green in early trade.

Back home, the wave of deteriorating global economic pandemonium along with double dip recession jitters callously bludgeoned Indian frontline equity indices and the bears ran berserk dragging the benchmarks even below the psychological 4,800 and 16,000 levels, for a brief period, a level last seen in May 2010. The bourses witnessed frenzy sentiments of risk aversion after the substantial downgrade in global growth forecast over policy failures in the US and Euro-zone nations, inflamed worries over world recession and also fears grew over the future of European banks with heavy exposure to sovereign debt. The sentiments were further undermined by reports emerging from Japan where a 6.8-magnitude earthquake jolted northeastern coast of the nation and triggering a brief tsunami advisory for waves of up to 20 inches. Fortunately there were no immediate reports of damage or injuries in the temblor, which rattled the area earlier this year by a catastrophic earthquake and tsunami. On the Domestic front though, Indian finance minister Pranab Mukherjee and planning commission deputy chairman Montek Singh tried hard to reinstate some confidence amongst investors but to no avail. According to Montek Singh, the current fiscal year is likely to see the GDP growth of 8-8.3%, as against 8.5% registered during the previous fiscal and he is aiming for annual average economic growth of 9% over the next five years starting from the next fiscal April 2012. Meanwhile, Mukherjee who reviewed the global economic situation with RBI Governor and the Chairman of the PM’s Economic Advisory Council, stated that the effect of the market sentiments in the US and Europe is impacting markets in the short-term. He affirmed that India is better positioned than most other nations to meet its problems and also said that the present crisis can, however, be expected to encourage increase in the equity exposure by foreign pension funds and other long-term institutional investors. Earlier on Dalal Street, the benchmark got off to a gap down opening and failed to show any kind of strength thereafter. The key gauges slipped around the fifteen month low levels below the psychological 4,800 and 16,000 levels for the first time since May, 2010. But some short covering in high beta real estate stocks in the dying hours ensured that the indices recovered from the lowest point in the session but snapped fourth straight session in the red terrain. Finally the NSE’s 50-share broadly followed index Nifty, took yet another around a triple digit cut while Bombay Stock Exchange’s Sensitive Index, Sensex got butchered by over three hundred points. The high beta Realty counter remained the only sectoral gainer in the space climbing over half a percent by the end of trade after heavyweights like DLF and HDIL surged. Finally, the BSE Sensex got pulverized by 328.12 points or 1.99% to settle at 16,141.67, while the S&P CNX Nifty plummeted by 98.50 points or 1.99% to close at 4,845.65.