Markets likely to get a modest gap-up start on strong global cues

The Indian equity markets went for a correction in second half of trade in last session. There was profit booking in the blue chips that dragged the markets lower, also there was no positive trigger from either the global or domestic front that could support the markets. Today, the start is likely to be good and a mild gap-up too can be expected on strong global cues after last session’s drubbing. There is likely to be buzz in the aviation stocks, as the government has decided to abolish airport development fee (ADF) at the Delhi and Mumbai airports from January 1. On the same time it could be negative for the companies like GMR and GVK. State-run Airports Authority of India (AAI) has also been directed to infuse more equity in both the joint ventures. The telecom stocks too may remain buzzing as the Attorney-General Goolam E Vahanvati, the highest law official in the country has refused to give a new opinion on the EGoM decision to charge telcos fee for their existing second-generation airwaves. Last week, the EGoM had dismissed the Attorney General's opinion and recommended the Cabinet that telcos be charged a one-time fee for their 2G spectrum they hold beyond the 4.4 MHz. The sugar stocks are likely to get support from Industry chamber CCI statement that early implementation of the Rangarajan panel's recommendations on deregulation of the sugar industry will enable smooth transition and boost growth of the sector.

There will be lots of important result announcements too. BPL, CRISIL, HCL Technology, Karnataka Bank, Gallantt Ispat and Rallis India are among many to announce their numbers today.

The US markets went for a rally on Tuesday on good economic data and some strong earnings numbers. While, the US Industrial Production rose in the month of September, Goldman Sachs and Johnson & Johnson came up with better than expected quarterly results, easing concerns about a dismal quarterly earnings season. The Asian markets have made a green start on some positive headway in the Euro zone debt crisis.

Back home, Indian equity indices, erasing all their morning gains, exhibited a bleak session of performance on Tuesday due to profit taking in select blue chip stocks. Proceedings in today’s session were exactly the opposite of what transpired on Monday when the main indices recovered in the latter half. Today, the first half was better while the second half turned out to be disappointing one. Both the frontline gauges lost their crucial 5,650 (Nifty) and 18,600 (Sensex) levels as investors kept themselves busy in offloading positions in sectors like realty, metal and capital goods. Concerns of poor Q2 earnings mainly became a reason for selling in frontline indices. Shares of Reliance Industries reversed early morning gains despite reporting decent set of results for the fiscal second quarter late on Monday evening. Moreover, traders also overlooked decent earning from Axis bank. The bank’s net profit for the quarter has registered growth of 22.08% at Rs 1123.54 crore as compared to Rs 920.32 crore for the quarter ended September 30, 2011. However, the global cues remained positive as European markets traded fabulously in the early deals on Tuesday, with investors buoyed by the latest batch of US data and earnings. Back home, the major blow came in from the realty space, which tumbled over three percent. Rate sensitive’s like Banking, Auto and Realty clobbered out of shape, as higher than expected September inflation numbers dimmed the rate cut hope in upcoming monetary policy review by Reserve Bank of India (RBI) on October 30, 2012. Selling in Metal and Power stocks too dampened the sentiments, both the sector ended the session with a cut of over a percentage point. Finally, the BSE Sensex lost 135.85 points or 0.73% to settle at 18577.70, while the S&P CNX Nifty declined by 39.25 points or 0.69% to end at 5,648.00.