Indian markets to get a cautious start of the new week

The Indian markets suffered cut of about a percent on the last trading day with selling intensifying in the final hour of trade. Marketmen fearing worse opted to book some profit. Today, the start of a crucial week is likely to be cautious and markets are likely to react to the cabinet reshuffle at the centre. There will be buzz in the power sector with the appointment of Jyotiraditya Scindia, while the oil sector stocks too may see some action, as the newly appointed oil minister M Veerappa Moily, just after taking charge has said that oil demand is rising and so ultimately, it is energy security that has to be addressed. There will be some cautiousness in the market ahead of RBI’s policy review tomorrow. There is general expectation that the apex bank will ease policy rates with a cut in cash reserve ratio (CRR) in its forthcoming monetary policy on October 30 and won’t go for a repo rate cut. Meanwhile, there is likely to be buzz in the financial sector too, as PMEAC Chairman C Rangarajan has said that India does not need super regulator for financial sector markets but need better co-ordination among existing regulators.

There will be lots of important result announcements to keep the markets buzzing. Aegis Logistics, Bank of India, BHEL, Colgate Palmolive, EID Parry, Havells India, Jagran Prakashan, Muthoot Finance, RCF, SKS Microfinance, Thomas Cook etc are among many to announce their numbers today.

The US markets weighed down by some weak earnings announcements, ended flat despite good GDP numbers on Friday. Traders were concerned about the health of the corporate even though the economic conditions showed sign of recovery. The Asian markets have made a mixed start, some of the indices are trading in red though few have recovered from their early fall taking cues from US economy which grew more than expected. Japanese market was up ahead of the Bank of Japan’s policy meeting tomorrow.

Back home, stock markets in India started the new Futures and Options series on a daunting note with the benchmark equity indices getting pummeled by over half a percent and slipping below crucial technical levels amid weakness in global markets. The frontline equity indices traded in a narrow range for most part of morning trades but a sharp wave of selling pressure emerged in late morning trades around the psychological 5,650 (Nifty) and 18,650 (Sensex) levels, which pushed the key gauges into a downslide. Market’s south bound journey only came to a halt with the close of trade as sentiments remained uninspiring right from the start of trade as traders stayed away from piling up positions in equities ahead of Reserve Bank of India (RBI) monetary policy slated to be announced on October 30, 2012. Some investors were also wary of taking position ahead of Cabinet reshuffle meet, scheduled to be held on October 28, 2012. The selling got intensified in second half of trade as banking space lost about a percent on reports that the central bank is unlikely to ease key policy rates at its second quarter monetary policy review in wake high inflation. Banking stocks like HDFC Bank, ICICI Bank, SBI, Axis Bank and PNB all edged lower in the trade. Cues from global front too remain subdued as European markets traded in the red in the early deals weighed down by a fresh batch of gloomy corporate outlooks. Back home, sentiments remain dampened after FMCG pack tumbled about two percent as companies like HUL and Dabur India failed to excite investors with their second quarter result. Though, Dabur India, on consolidated basis, reported 16.42% rise in second quarter net profit at Rs 202.37 crore as compared to Rs 173.83 crore for the same quarter in the previous year while, HUL registered rise of 17.13% in its Q2FY13 net profit at Rs 806.92 crore as compared to Rs 688.92 crore in Q2FY12. However, the downsides remain capped up to certain extent as Auto shares went up by a percent on hopes that sales growth would pick up ahead of the festive season. Finally, the BSE Sensex lost 133.29 points or 0.71% to settle at 18,625.34, while the S&P CNX Nifty declined by 41.00 points or 0.72% to end at 5,664.30.