Markets to make a positive start; political developments eyed

The Indian markets after a range bound day of trade ended flat with a positive bias in last session, though the traders remained glued to political development where an all party meet failed to come to any conclusion. Today, the start is again likely to be cautious but in positive terrain as the UPA coordination committee will meet today to discuss the provision of voting, while Prime Minister Manmohan Singh, too, will be meeting Congress allies to end deadlock over FDI in Parliament. Traders will also be eyeing the movement of rupee which has plunged and hit its lowest level in more than two-and-a-half months in last session, weighed down by heavy dollar buying by oil refiners. Though, the development has supported the IT and export oriented stocks but weighed on others. The local currency is likely to remain in somber mood as the oil importers will keep buying dollar to make payments to meet import commitments. There is likely to be some buzz in the telecom sector, as the Reserve Bank of India has relaxed overseas borrowing rules for successful bidders in the airwaves auction, making it easier for them to raise money to pay the government. There is some good news for the capital goods sector too, as the Minister of Heavy Industry and Public Enterprises has pitched for incentivising capital goods, particularly for exports.

The US markets made a mixed closing on Monday, there were concern related to fiscal cliff that made the investors cautious. The Asian markets have once again made a mixed start, though the indices trading in red are marginally down from their previous close after Euro zone finance ministers and the International Monetary Fund clinched agreement on reducing Greece’s debt.

Back home, the Indian markets made a flat start of the F&O expiry week, trade remained range-bound throughout the session and the traders’ preferred to remain on sidelines eyeing the political developments where an all party meet was going on to break logjam in Parliament over the government’s decision to allow foreign investment (FDI) in retail. The meeting however, failed to bring any consensus with the government appealing to opposition parties to reconsider their demand for a debate under rules that stipulate voting and the latter remaining adamant. Traders were also concerned about the fiscal deficit with government facing shortfall in proceeds from share sales and mobile auction, however there was some respite from current account deficit front, as C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council said 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. There was not much support from the global markets too, while the Asian markets made a mixed closing, the European markets made a soft start ahead of euro-area finance ministers meet for a third time this month. Back home, the domestic markets traded in a tight range, at some instances there were bouts of selling but the major indices managed to hold the psychological levels of 18,500 (Sensex) and 5,600 (Nifty). The day was for the broader markets that kept outperforming the benchmarks from the initial trade and managed a decent close at the end. PSU sector was the major drag of the day as Hindustan Copper shares plunged by 20% to hit its lower circuit limit for the second consecutive day after the government sold 5.58% of its stake in the company at an average price of Rs 156.56 apiece, much lower than its market price. On the same time, the Aviation sector kept flying high on stake sale buzz, it was reported that different Indian carriers are in talks with carriers based in the Middle East and Southeast Asia and sale of stakes could happen soon. Aviation major Jet Airways surged by 11%, while Spice Jet zoomed by 13%. Kingfisher Airlines too touched its upper circuit limit of 5% by the end. Finally, the BSE Sensex gained 30.44 points or 0.16% to settle at 18,537.01, while the S&P CNX Nifty rose by 9.30 points or 0.17% to end at 5,635.90.