Markets to get a positive start as government sails through vote on FDI in retail

The Indian markets showed some final hours enthusiasm to close modestly higher in last session with Nifty closing above 5900 mark. Today, the start is likely to be on a positive note, as the government finally made it to Lok Sabha, rejecting BJP brought motion that sought withdrawal of the UPA decision to allow foreign direct investment in multi-brand retail.  Though some cautiousness may remain, as the government in the Rajya Sabha might find it difficult to muster the numbers. Now the street is likely to return to its usual course of action with more reform hope. The Union Cabinet is likely to decide on setting up a National Investment Board (NIB) for quicker implementation of projects entailing investments in excess of Rs 1,000 crore at a meeting scheduled today. It is being said that the cabinet could also take up the proposals on a new investment policy for urea and continuation of additional compensation to indigenous manufacturers of potash and phosphorus. Traders will also be eyeing the movement of rupee as it has been strengthening for last couple of days and might weigh on the IT sector stocks. Meanwhile, the retail stocks may show a confident move after the government won a crucial vote in the Parliament on allowing 51 per cent FDI in multi-brand retail.

The US markets made a mixed closing on Wednesday, while Dow and S&P finished higher boosted by a batch of upbeat economic reports and optimistic comments from China’s new leader, Nasdaq suffered cut of over half a percent after tech major Apple plunged on report that company's margin requirements were being raised to 60 percent from 30 percent by COR Clearing. The Asian markets have made a mixed start, though the Chinese market was once again in red but most of the other indices have moved higher in early trade on good economic data from US and Japan.

Back home, mood of consolidation extended to the third straight day on the Indian markets, despite some early leads markets remained range-bound throughout the session with traders remaining cautious ahead of the vote on government’s decision to allow foreign direct investment in multi-brand retail. There was not much activity on the street with some disappointments from the economic front adding to the woes. India's services sector growth declined in November, HSBC services Purchasing Managers’ Index (PMI), fell to 52.1 in November from October’s 53.8, registering a 13-month low and suggesting an economy limping towards its slowest growth for the year in a decade. The HSBC India Composite Output Index posted 53.2 in November, slightly down from 53.5 in October. Back on street, early trade supported by firm Asian peers showed that the markets will come out of the consolidation phase, as the government looked confident in sailing through the vote on FDI in retail, though the scathing attack by the opposition and some of the government allies made the investors cautious. Though, Parliamentary Affairs Minister Kamal Nath said that the government is confident of winning the retail FDI vote even as the Opposition alleges that the entire process is a farce and the vote has been fixed. The government however has to get the amendments to the Foreign Exchange Management Act (FEMA) regulations cleared which is necessary for effecting its decision to permit 51 per cent FDI in multi-brand retail and 100 per cent in single-brand retail. The global cues were more or less supportive, though the US markets ended marginally lower overnight but the Asian markets showed good enthusiasm supported by a bounce back in the Chinese markets. Back home, the major indices once again moved in a tight band, though the broader indices showed a steady trade throughout the day but the front liners kept flickering and a couple of times profit booking too was witnessed. Realty index was on a continuous bull run and added another about 3% for the day, while the metal stocks too remained in demand and the index on the BSE gained about 2%. Oil & Gas and banking were the other prominent gainers. On the other hand, IT sector suffered sharp profit booking and emerged as the laggard of the day on concern that Cognizant Technology Solutions Corp issuing lower revenue growth guidance for 2013 based on compensation targets for top executives. Cognizant, in a filing to the US market regulator Securities and Exchange Commission (SEC) said that its top executives will receive 100 percent of their performance-linked shares if the company achieves revenue of $8.5 billion next year, a 16 percent rise over its projected 2012 revenue. However, Indian IT industry demand is likely stable and not falling off by any means but the concern kept the investors in tizzy. One non sectoral gauge, Aviation remained in limelight after civil aviation minister Ajit Singh said that the government has no plans to regulate airfares; he said that the government just intends to make the pricing mechanism more transparent. Finally, the BSE Sensex gained 43.74 points or 0.23% to settle at 19,391.86, while the S&P CNX Nifty rose by 11.25 points or 0.19% to end at 5,900.50.