Markets likely to make a soft start on weak global cues

The Indian benchmarks ended lower on Muhurat trading as sluggishness in the global markets weighed on the sentiments. Today, the start is likely to be soft, as the global markets are not in good of their health; moreover, the domestic markets will also react to inflation numbers which eased marginally in the month of October. Inflation declined marginally to 7.45 percent in October even though prices of food items like rice, wheat pulses and potato showed a rise. The telecom stocks are likely to be in somber mood after the much-talked 2G mobile phone spectrum auction virtually flopped with just Rs 9,407 crore being garnered in the process contrary to the high valuation estimated by the CAG in its damning report of  the government two years ago. The government was targeting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3 percent of GDP.

There will be lots of important result announcements too. CMI, HMT, Oswal Spinning, Syncom Healthcare, Triveni Engineering, NELCO, Mphasis, Siemens, Bajaj Hindusthan, Walchandnagar etc announcing their numbers today.

The US markets ended the session at their lowest levels since the summer on Wednesday, as investors focused on the coming battle over the US ‘fiscal cliff’. The sell-off witnessed following President Barack Obama’s first press conference since re-election, where he reiterated his call for the wealthy to pay higher taxes. Asian markets have made a lower start, taking their lead from a drop in Wall Street shares, as investors reacted to the prospect of drawn-out negotiations to avert the looming US ‘fiscal cliff’ by shedding riskier assets.

Back home, after two days of continuous downfall, Indian benchmark equity indices consolidated their position around the previous closing levels on Monday. The psychological 5,700 (Nifty) and 18,700 (Sensex) levels proved as stern resistances as the key gauges failed to surmount those levels by the end. The key gauges displayed listless performance through the day as the aimless benchmarks appeared exhausted and showed only sideways kind of movement in a tight band as September factory output data dampened investors’ sentiment. India’s index of industrial production (IIP), a key measure of industrial output witnessed contraction of 0.4 percent in September 2012 at 163.6, way below the consensus estimates of 3 percent growth figure. The industrial output mostly remained fragile in the previous few months, with an exception being August, as growth in all three sectors viz. mining, manufacturing and electricity got dampened. India’s Consumer Price Index (CPI) too failed to cheer traders’ sentiment as provisional annual inflation rate based on all India general CPI (Combined) for October 2012 on point to point basis stood at 9.75 percent as compared to 9.73 percent for the previous month of September 2012. Domestic markets got off to a quiet start as sentiments across global space remained uninspiring. Markets across the Asian region exhibited sluggish trend after Japan’s economy shrank at the fastest pace since last year’s earthquake. Back home, some amount of pressure also came in after the relentless decline in Indian exports extended to the sixth month in a row, dropping 1.63 percent in October 2012 due to persistent economic turmoil in the US and European markets. Meanwhile, metal stocks like Bhushan Steel, Sail, Hindalco Industries, Jindal Steel & Power and Hindustan Zinc all edged lower as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.86% on November 9, 2012. However, losses remain capped as investors continued to show buying interests in Consumer Durables counter, which surged over a percent led by Gitanjali Gems, Rajesh Exports and Titan Industries. The rate sensitive banking and realty too found takers in the session as they closed with notable gains of around a percent. Muhurat trading to start the Samavat year 2069 remained a lackluster one, though the domestic markets made a positive start but soon they slipped into red and ended lower on special trading on Tuesday, however broader markets closed with some gains. Finally, the BSE Sensex lost 51.47 points or 0.28% to settle at 18,618.87, while the S&P CNX Nifty declined by 16.75 points or 0.29% to end at 5,689.70.