Markets to get a cautious start of the F&O expiry week

The Indian markets remained in consolidation mood on the last trading session and ended marginally in red. Today, the start of the holiday shortened F&O expiry week is likely to be cautious and the traders will be eyeing the development in the Parliament, as there is going to be an all-party meeting to break logjam in Parliament over the government’s decision to allow foreign investment (FDI) in retail. Traders may get some respite with statement of C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council that India’s current account deficit should come down to around 3.5 per cent of the gross domestic product (GDP) by the end of this financial year. In 2011-12, India’s current account deficit rose to 4.2 per cent of the GDP. He has also said that the rupee will continue to remain around its current levels as capital inflows, which are likely to pick up in the second half of the current fiscal, will prevent the rupee from depreciating further. There will be buzz in the whole trading fraternity as the market regulator, the Securities and Exchange Board of India, has warned as many as 40 listed private companies that the June 2013 deadline for promoters to reduce their holding to 75% would not be relaxed. Aviation sector is likely to keep flying high on reports of stake sale in different airline companies.

The US markets made a positive close on Friday encouraged by the expectation of good retail sales, though the Asian markets have made a mixed start and some of the indices are trading in red. Japanese market was the top gainer in the pack, as yen traded near an almost seven-month low after minutes of last month’s Bank of Japan policy meeting showed members calling for wider monetary easing.

Back home, Indian frontline equity indices staged a smart recovery in the last leg of trade, after hitting intraday low, paring losses of over half a percent to finish near their pre-close level following revival in European markets. The late rebound in sentiments came on optimism that a funding deal for debt-choked Greece will ultimately be agreed. The local benchmarks, after roving near its previous close level in morning trade, drifted lower in the noon session as investor sentiment weakened as both Houses of the Parliament had to be adjourned due to uproar over foreign direct investment (FDI) in retail and SC/ST quota Bill. The psychological 18,500 (Sensex) and 5,600 (Nifty) levels proved as strong support levels as the key indices despite repeated attempts refused to go substantially below those levels. The domestic bourses took U-turn in the late trade following recovery in European counterparts which entered into green trajectory, after progress was reported in talks to help Greece manage its huge debt and secure much needed aid payments. Back home, markets traded mostly in the red as sentiments got hammered by depreciation in Indian rupee. The Indian rupee continued to decline against the dollar for the fourth consecutive day by slipping another 13 paise to 55.34 on sustained demand of the American currency from banks and importers. Somberness also increased after telecom stocks declined amidst squabble over 2G reports. Public Accounts Committee (PAC) Chairman Murli Manohar Joshi today dismissed allegations by former auditor R P Singh that he tried to influence the outcome of the 2G report as an attempt to malign the institutions of CAG and PAC. Stocks of Pharmaceuticals companies like Cipla, Lupin, and Ranbaxy Lab also turned bitter after Union Cabinet endorsing the Group of Ministers' (GoM) recommendations on the National Pharmaceutical Pricing Policy, imposed a cap on prices of 348 essential medicines at the arithmetic average of prices all drugs in a particular segment with more than one percent market share. Finally, the BSE Sensex lost 10.77 points or 0.06% to settle at 18,506.57, while the S&P CNX Nifty declined by 1.15 points or 0.02% to end at 5,626.60.