Markets to get a cautious start; earnings to give direction

The Indian markets bounced back after a sharp drag in last session, supported by the good earnings announcement by few heavy weights. Positive signals from the Europe too supported the markets in second half of trade. Today, the start is likely to be cautious; though global cues are not very firm but local indices may hold their gain in early trade in the absence of any bad news from economy side, though being the penultimate day of F&O expiry volatility may creep in. Earnings are likely to hog the limelight again with Cairn India and Idea Cellular showing positive reactions after reporting better than expected quarterly results post market hours on Monday. There will be buzz in the PSU stocks as well, as the chiefs of PSUs will meet the Prime Minister and they may highlight interference by their administrative ministries in the meeting. There will be some respite in rate sensitives with the inflation surging to 10 months high as Planning Commission member Abhijit Sen has forecast a farm output growth of 0.5 per cent to one per this year, despite a fall in kharif output. There will be lots of important result announcements and some buzz in Kingfisher Airlines stocks after it made offer to its striking workers. The company is offering to pay three months wages by November 13 and clear the arrears every month after that.

Arvind, Bank of Maharashtra, Hero MotoCorp, JP Power, Lupin, Rolta India, SKF India, Sterlite Inds, United Phosphorus, Wyeth and Yes Bank are among the many to announce their numbers today.

The US markets made a flat but positive closing on Monday after witnessing a big fall in last session. Earnings continued disappointing investors, as global manufacturer Caterpillar came up with weak outlook. Most of the Asian markets have made a green start, though they are gaining marginally as concern over slowing corporate earnings growth and European debt crisis continued looming large.

Back home, key Indian benchmark indices, after been dragged down in previous session due to global weakness, resumed their northward journey on Monday by ending the session vivaciously over half a percent, recapturing their crucial 5,700 (Nifty) and 18,750 (Sensex) levels. The markets, after a choppy morning session, remained in fine fettle throughout the day’s trade as investors piled up positions in IT and technology stocks on the back of better than expected performance of the IT bellwether TCS helped the markets to gain strength. TCS, on consolidated basis, posted a rise of 49.25 percent in its net profit at Rs 3434.37 crore for the quarter ended September 30, 2012. The company also managed to beat estimates on the volume and pricing front. Further, markets extended their bull run in last leg of trade after India’s top construction and engineering company beat estimates with a 42.45 percent rise in net profit for the July-Sept quarter, helped by a one-time gain and higher revenue booking. The Mumbai-based engineering conglomerate’s net profit rose to Rs 1,137.31 crore during the second quarter of the fiscal year from Rs 798.39 crore a year earlier. Indian rupee, which fell 2 percent in previous two sessions, too aided the sentiments appreciating 29 paise to 53.54 against the US dollar at the time of closing of equity markets. Moreover, recovery in European counters, after a subdued start, too supported the sentiments on the back of renewed hopes that debt-stricken Spain will soon request a bailout after Prime Minister Mariano Rajoy clinched election victory in his home region of Galicia. Back home, investors also got some confidence after provisional data showed that the foreign institutional investors (FIIs) were net buyers of Indian stocks on October 19, 2012. FIIs bought shares worth a net Rs 80.11 crore, as per provisional data from the stock exchanges. Some amount of support also came in after banking stocks gained on expectations that the Reserve Bank of India (RBI) may cut the cash reserve ratio, or the amount of deposits lenders must keep with the central bank, at its policy review on October 30. However, the gains remain capped as Metal stocks like Sesa Goa, SAIL, Uttam Galva, Sterlite Industries, and Jindal Steel edged lower. Finally, the BSE Sensex gained 111.13 points or 0.59% to settle at 18,793.44, while the S&P CNX Nifty rose by 32.90 points or 0.58% to end at 5,717.15.