Indian equity markets likely to get a cautious start

The Indian equity markets stabilized in last session after witnessing a sharp slump in the day before. Trade remained in a tight band but traders gathered courage in second half to take the markets close with decent gains. Today, the start is likely to be cautious on mixed global cues, however on the domestic front the news are optimistic with the eight core industries rising to an annual 5.1% in September, faster than the upwardly revised 2.3% in August and 2.5% in September, 2011.  Auto and cement companies will be in focus, as they will be announcing their monthly sales numbers. The realty companies too are likely to remain in limelight as the Reserve Bank of India in its bid to plug holes in realty FDI has suggested that the minimum capitalization requirement for any company with over 75% foreign holding should be increased by treating it as a wholly owned subsidiary of the foreign company. The apex bank after keeping its policy rates unchanged has said that the government must balance its books by cutting spending as this is the only way to achieve a sustained fiscal consolidation.

There will be lots of important result announcements too, and the reactions based on their performance. BGR Energy, EIH, Elecon Engineering, Glaxosmithkl Consumers, Godrej Properties, Hexaware Technology, JSW Energy, Jyothy Lab, NDTV, State Bank of Travancore and TV18 Broadcast etc will be announcing their numbers today.

The US markets made a mixed closing as trading resumed after being shut for two days by Superstorm Sandy. The trade remained choppy and traders were now looking for crucial monthly jobs data from the federal government on Friday. The Asian markets have mostly made a weak start on report of contraction in US business activity; some of the indices are trading lower by over a percent in early trade. However the Chinese market is trading in green as the PMI came at 50.2, first time above 50 since July.

Back home, after trading lackluster for first part of the day, key Indian benchmarks rebounded in late trades to end higher on Wednesday led by auto and financial shares. After getting off to a flat to positive opening, the markets traded in close proximity with the previous closing levels for most part of morning trades as cues from the Asian space remained sluggish. But with the sharp up-move in second half, the frontline indices not only surpassed the psychological 5,600 (Nifty) and 18,500 (Sensex) levels but also regained most part of the ground lost in previous session’s brutal sell-off. The main support came in from Auto space which surged over one and a half percent, buoyed by Maruti Suzuki which scaled 52-week high on reporting better than expected Q2 numbers. The company posted a fall of 5.41 percent in its net profit at Rs 227.45 crore for the quarter ended September 30, 2012 as compared to Rs 240.45 crore for the same quarter in the previous year. Meanwhile, stocks like Hero MotoCorp, Tata Motors and Mahindra & Mahindra too edged higher ahead of reporting October sales numbers, which are expected mostly to be higher given the start of the festive season. Cues from global markets too remained supportive as European counters traded firmly in the early deals on Tuesday on word of a deal reached between the Greek government negotiators and its Troika of creditors - the European Commission. Back home, some amount of support also came in from banking stocks which rose on account of short covering. They had witnessed huge selling yesterday on the back of Reserve Bank's new provisioning norms for restructured assets. PSU lenders - State Bank of India and Punjab National Bank - traded with over 1 percent gains. Media shares also aided the sentiments as stocks like TV18 Broadcast, BAG Films, Network 18 Media, Sun TV Network and Zee Entertainment all edged higher as the deadline for cable operators to switch to digital TV ends today, October 31, 2012, in Delhi, Mumbai, Kolkata and Chennai. However, the gains remain capped as some anxiety was witnessed after Parthasarathi Shome committee, set up to re-examine the General Anti-Avoidance Rules (GAAR) proposed by former finance minister Pranab Mukherjee in this year's budget, reportedly presented its final recommendations to current finance minister P Chidambaram today, the outcome of which would be public on November 1, 2012. Finally, the BSE Sensex gained 74.53 points or 0.40% to settle at 18,505.38, while the S&P CNX Nifty rose by 21.80 points or 0.39% to end at 5,619.70.