Markets likely to make a cautious start; OMCs will be in focus

The Indian markets in the last session, closed lower for fifth consecutive day due to feeble global set-up. The telecom stocks kept buzzing and moved higher post 2G auction. Today, the start is likely to be cautious, as the global markets are not in good of their health. Investors will keep a close eye on public sector oil marketing companies after Indian Oil Corp (IOC) slashed petrol prices by Rs 0.95 per litre (excluding of local levies) from Friday. Other fuel retailers (BPCL and HPCL) will also reduce petrol rates, after the oil ministry pushed them to pass on the benefit of softening of international rates without further delay. Meanwhile, the banking stocks will be in limelight as finance minister said that the banking sector needs to help spur growth, especially at a time when the RBI has not eased its monetary policy. Apart from this there will be lots of scrip specific actions to keep the markets buzzing.

The US markets ended the session in the red on Thursday as investors remain concerned that economy could contract again if no deal is reached in Washington to avoid the ‘fiscal cliff’- large, automatic budget cuts and tax hikes that begin to take effect in the new year. While retailer Wal-Mart tumbled after disappointing sales numbers. Asian markets have made a mixed opening after falling nearly 2 percent this week amid concerns about the looming US ‘fiscal cliff’, while Japanese stocks rallied for a second day on expectations of further monetary policy easing after an election next month.

Prolonging their southbound journey for fifth day in a row, Indian benchmarks snapped the listless trading session with a cut of over half a percent. The day, which started on a sluggish note in wake of weakness in the other global markets, never looked confident, and ended the session below their crucial 5,650 (Nifty) and 18,500 (Sensex) levels. The traders’ sentiment took a hit with the lackluster response to the government’s much anticipated 2G spectrum auction. 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 report. 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. Meanwhile, investors reacted depressingly to the revision in August inflation numbers. A sharp upward revision in the August numbers overshadowed the lower-than-expected October figure. The August WPI inflation was revised to 8.01 percent from the provisional 7.55 percent. However, inflation numbers 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 sentiments were further weighed down by the concerns over global growth recovery coupled with US fiscal cliff tensions and bailout uncertainty of Spain and Greece. Back home, market witnessed slight recovery in late trade after Finance Minister said most state-run banks need an infusion of additional capital and a decision will be taken in the next few weeks. Further, FM urged RBI to start working on issuing final guidelines for granting licenses to new banks and receiving applications from the interested entities in anticipation of Banking Regulation Act (BRA) being amended. On sectoral front, some amount of pressure also came in from software pack as it tumbled about two percent after the IT industry body Nasscom lowered its growth expectation for the industry this financial year. Nasscom now expects the export growth in dollar terms to be at the lower end of the 11-14% that it had forecast in February. However, the losses remain capped as telecom operator Bharti Airtel and Idea Cellular gained after 2G auction. Bharti was the provisional bidder in only one circle (Assam Circle) while Idea Cellular was provisional bidder in 8 circles. The losses also were curtailed as stocks from consumer durables counters remained jubilant encouraged by the Diwali purchase. Finally, the BSE Sensex lost 147.50 points or 0.79% to settle at 18,471.37, while the S&P CNX Nifty declined by 35.95 points or 0.63% to end at 5,631.