Markets to get a soft start on sluggish global cues

The Indian markets ended marginally lower in last session after gyrating in a tight range, there was cautiousness related to political development that restricted marketmen to open bet. Today, the start is likely to remain same and tailing the other global markets local indices too are likely to get a mildly soft start. All eyes will be on parliament where a vote on FDI in retail issue is scheduled, though the government is confident of coming through and there might not be much reaction on street. The caution is likely to prevail as the global ratings agency Fitch has cautioned that a loosening in fiscal policy ahead of the 2014 elections could further weaken India’s public finances and put pressure on ratings. The pharma sector will keep buzzing after government decided that all foreign investments in existing domestic pharma firms should be allowed only after clearance by the FIPB. The PSU banking stocks too will be in action, as the finance ministry is expected to take a crucial decision on infusing Rs 15,000 crore capital in public sector banks this week.

The US markets closed lower on Monday on getting weaker than expected manufacturing data, the early enthusiasm of good economic data from China got washed with its own, even some development to avert fiscal cliff was unable to support the markets. The Asian markets have made a soft start and China, despite strong macro data was underperforming heavily. Japanese market too was lower as yen strengthened on report of contraction in US manufacturing.

Back home, trade at Indian equity markets remained lackluster and range bound on Monday after a four-day rally, lacking any fresh buying interest. Traders preferred to remain on sidelines ahead of the discussion and vote on FDI in retail in parliament. Though there was round of report showing sign of manufacturing growth across the globe but market-men concerned about the political development bound to take place in next couple of days avoided building fresh position in the frontline stocks, on the other hand broader markets kept their momentum going for yet another day. Markets made a flat start and in early trade moved higher to their intraday high but after that major indices slipped into red and remained range-bound, hardly showing any courage to break the range. There was some spurt in the market after the release of manufacturing PMI for November, which increased to five-month high. The seasonally adjusted HSBC Purchasing Managers’ Index surged to 53.7 from 52.9 in October. New orders and export sales both increased at manufacturing companies in India during November. The global cues were somewhat sluggish; the US markets had made a flat closing on Friday, while the Asian markets despite some good economic reports from the region made a mixed closing. Back home it seemed that markets are going through a short term consolidation phase before continuing their upward movement later this month. If the FDI in retail vote goes over successfully, market participants will gain confidence that reform measures are indeed getting through the Parliament. There was cautiousness with no major buying from any front. High beta realty index surged again, gaining over 1 percent, while metal, power and consumer durables too showed their strength and were up by over half a percent. On the same time, rate sensitive banking sector along with defensive sector FMCG witnessed some selling pressure. The good manufacturing numbers dampened the hopes that RBI will be going for any rate cut soon. Auto sector though gained marginally but there was mixed reaction based on the November sales performance. One non sectoral gauge, cement, kept buzzing since morning and ended with good gains on buzz of good sales and dispatch numbers for November amid report that UltraTech Cement is in talks to buy stakes in Jaypee Group's cement business. Aviation sector too was in lime light on reports that will soon seek regulatory approval to tweak its ownership pattern to facilitate a stake sale to Etihad Airways and Kalanithi Maran, the major promoter of SpiceJet, has decided to increase his stake by five per cent in the company. Both the stocks were up by over 5% for the day. Finally, the BSE Sensex lost 34.58 points or 0.18% to settle at 19,305.32, while the S&P CNX Nifty declined by 8.90 points or 0.15% to end at 5,870.95.