Markets likely to get a cautious start, trade to remain range bound

The Indian markets barely managed to make a green close in last session, the trade remained volatile and defensives were favoured against the high beta. Traders remained concerned about the Finance Minister’s statement that India's economic growth could slow to as little as 5.5 percent this fiscal year and the government will have to go for additional borrowings. Today, the start is likely to remain cautious and the traders will be eyeing the global developments. On the domestic front traders will be eyeing the rupee movement that has dropped to an eight-week low against the US dollar on Monday on account of global risk aversion ahead of US elections. Meanwhile, there is some consoling news for the rate sensitives’ as the Reserve Bank of India’s governor Duvvuri Subbarao has said that he may go for easing monetary policy as early as January. Also, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said that the government is taking several steps to boost investor confidence and more such measures may follow.

There will be lots of result announcements too, to keep the markets buzzing. ABB, Andhra Bank, Bosch, Britannia Inds, Canara Bank, Central Bank, Chambal Fertilizers, Dena Bank, Essar Shipping, HCL Infosystems, Indian Hotels, Motherson Sumi, Oil India, Piramal Life, Reliance Infra, Tata Power etc will be announcing their numbers today.

The US markets closed marginally higher on Monday as traders remained cautious a day ahead of the Presidential Election as Opinion polls indicated a neck-and-neck fight between President Barack Obama and Republican challenger Mitt Romney. The Asian markets have made a mixed start with some of the indices marginally trading in green there is cautiousness across the region ahead of the US presidential election and China’s once-in-a-decade leadership change later this week, which is likely to see in the selection of Xi Jinping to succeed President Hu Jintao.

Back home, after witnessing three days of consecutive gain, stock markets in India showcased consolidation on Monday with both the gauges managing to snap the trade tad above their pre-close level. After hitting the lowest point in the session, the frontline indices showed some signs of recovery in dying moments of trade and closed with a positive bias but did not budge a great deal from previous closing levels. It turned out to be a choppy session of trade as the frontline indices were trading in an extremely tight range. The psychological 18,750 (Sensex) and 5,700 (Nifty) levels proved as strong support levels as the key indices despite repeated attempts refused to go substantially below those levels. The sentiments got some support with the Prime Minister’s key economic adviser, C Rangarajan’s statement that there is no case for lowering India's credit rating and global agencies need to look at the international scenario before taking any rating action. However, the gains remain capped on report that service sector activity in India, which expanded at the slowest pace in six months in October, too added to the pessimistic environment. According to the seasonally adjusted HSBC Business Activity Index, the service sector activity slowed to 53.5 in October, against September's seven-month high of 55.8. Cues from the money market remained uninspiring for most part of the session as the rupee continued its streak of depreciation. The currency touched a low of 54.56 a dollar in intraday trading after opening at 54.11 a dollar in the morning. Cues from global markets also remained unsupportive as European counters exhibited a dreary trade in early deals ahead of an expectedly tight US Presidential election. On the domestic front, some pressure also came in from IT pack which declined ahead of the US presidential election on November 6, 2012. Metal shares also dropped as commodity prices dropped in New York on November 2, 2012. Some disappointing second quarter result too added pressure to the downside of the markets, the PSU lender Allahabad Bank reported a fall of 52.01% in its net profit at Rs 234.20 crore for the quarter ended September 30, 2012 as compared to Rs 488.02 crore for the same quarter in the previous year, its NPA too increased to 2.95% for the quarter as against 1.77% in the previous quarter. Benchmarks, in the dying hours, managed to eke out some gains supported by defensive FMCG sector, which was able to make some mark with gain of over a percent. Moreover, healthcare supported by some good results and Bankex aided by late hour spurt in PSU banks, were the other gauges that supported the sentiments. Finally, the BSE Sensex gained 7.42 points or 0.04% to settle at 18,762.87, while the S&P CNX Nifty rose by 6.50 points or 0.11% to end at 5,704.20.