Markets to make a soft start of the Diwali week

The Indian markets suffered sharp cut on Friday due to feeble global cues and some weak earnings announcements. Today, the start of the holiday truncated week is likely to be bit soft-to-cautious, and markets may wait for the Diwali trading to get any direction. Traders will be taking cues from the Industrial output data for the month of September which is scheduled to be announced later in the day. The telecom stocks will keep buzzing ahead of the start of 2G auction, the government has pushed through the proposal to re-farm spectrum in the 900-MHz band to 1,800 MHz, allowing incumbent operators to keep only 2.5 MHz and has imposed a one-time spectrum charge on incumbent GSM operators for spectrum they hold beyond 4.4 MHz and 2.5 MHz for CDMA players. An auction base price has been fixed at Rs 14,000 crore for five MHz in the 1,800-MHz band.

There will be lots of important result announcements to keep the markets ticking. Bhushan Steel, Geodesic, GMR Infra, Jaiprakash Associates, PBA Infra, Raj Oil, REI Agro, Simbhaoli Sugar, Spicejet, Steel Strip Wheels, Titagarh Wagon, Trident, etc announcing their numbers today.

The US markets closed flat with a positive bias on Friday, the trade turned choppy in later part of the day President Barack Obama’s vowed for higher taxes for wealthiest. Most of the Asian markets have made a soft start after Japan’s economy shrank at the fastest pace since last year’s earthquake; however Chinese market was marginally in green as overseas shipments increased 11.6 percent from a year earlier.

Back home, slew of disappointing second quarter results pushed key Indian benchmarks below their crucial 5,700 (Nifty) and 18,700 (Sensex) levels. The frontline gauges remained range-bound in early session, keeping their head above water, but drifted to lower levels in the second part of the day’s trade to settle near intraday low with a cut of around a percentage point after State Bank of India (SBI) reported bitter second quarter result. The company reported disappointing asset quality for the second quarter ending September 2012 though, India’s largest lender, on consolidated basis, reported 31.84% rise in its net profit at Rs 4575.31 crore for the quarter as compared to Rs 3470.43 crore for the same quarter in the previous year. The sentiments continued to reel under pressure as ONGC reported awful Q2FY13 numbers. Its net profit for the quarter dropped 31.77% at Rs 5896.57 as compared to Rs 8642.23 crore in Q2 FY12. The company’s subsidy outgo has been more than doubled to Rs 12,330 crore in Q2 from Rs 5,713 crore in the same quarter of last fiscal. Moreover, the world’s sixth largest steel making company Tata Steel too disappointed the street by reporting lower than expected numbers on standalone as well as consolidated basis, sending its shares down by over 3 percent. Feeble global cues too dampened the sentiments as the US equity markets fell as concerns over the looming fiscal cliff overshadowed a pair of better-than-expected economic reports while, most of the Asian equity indices shut shop in the red. Back home, selling intensified in the second half as PSU Bank counters tumbled about three percent after SBI disappointed with its Q2 numbers. Other PSU banks like Allahabad Bank, Andhra Bank, Bank of India, Canara Bank, Central Bank of India, Dena Bank, IOB, Indian Bank, OCB, UCO Bank and Union Bank were down 1-3 percent due to weak sentiment. Selling was also witnessed in Software counters on concerns about upcoming fiscal challenges for the United States, the biggest outsourcing market for Indian IT firms. Sentiments also soured after stocks of Jet Airways, Dabur India and Reliance Industries fell in a knee-jerk reaction post Arvind Kejriwal, an India against Corruption Activist continued his string of revelations and pointed out that people associated with these companies hold accounts in the Geneva branch of HSBC. Finally, the BSE Sensex lost 162.58 points or 0.86% to settle at 18,683.68, while the S&P CNX Nifty declined by 52.50 points or 0.91% to end at 5,686.25.