Markets likely to get flat-to-positive start of the new week

The Indian markets closed the politically crucial last week on a flat note, though the government was able to get its decision of allowing FDI in multi-brand retail, passed in the Parliament but traders opted to book profit in last. Today, the start is likely to be flat and the whole week is likely to be eventful with lots of macro data scheduled to be announced later in the week. The uptrend in the markets is likely to remain intact, as traders are now optimistic that the government will be able to get through insurance and banking bills, the FDI way. The telecom stocks are likely to see some jubilation, as perturbed by the soft response of the telcos in the recently concluded 2G auctions, the Empowered Group of Ministers has reduced the reserve price for spectrum by 30 per cent in the four circles which did not receive any bids.  Also, there will be some action in the PSU stocks, as the Union Revenue Secretary has said that the Government was confident of meeting its disinvestment target for 2012-13. There will be buzz from the primary markets too as, Bharti Infratel and PC Jeweller’s IPO- will hit the capital market.

The US markets made a mixed closing on Friday on the back of upbeat jobs report, though there was concern of delay in reaching an agreement on the fiscal cliff that capped the gains. Most of the Asian markets have made a positive start, though there was some cautiousness emerging after the report that China’s export grew at a slower pace than expected. While, Japan has technically slipped into recession as its GDP shrank at an annualized 3.5 percent in the third quarter.

Back home, domestic equity markets once again witnessed a volatile day of trade with government finally passing the last hurdle in its decision of allowing FDI in multi-brand retail. Markets that have made a positive start taking positive cues from the global markets could not hold up to their gains and slipped into red terrain in the very first hour, though there was immediate recovery too that lasted till noon session after which the markets once again slipped into red and suffered sharp cut in the final moments despite the government’s win in Rajya Sabha. Though, the voting factor was already discounted on the street after Bahujan Samaj Party Chief Mayawati announced last day of voting in favour of the government on the issue. The markets were concerned on report of a one metre-high tsunami hitting northeast Japan. During the day, Finance Minister P Chidambaram tried to console the markets by saying that the government will be able to accommodate the enhanced outgo within the present limit and don’t need any additional borrowing in the remaining part of the current fiscal to meet its budgeted market borrowing at Rs 5.7 lakh crore during the current fiscal to bridge the expenditure-revenue gap. The global cues remained somewhat positive as the US markets closed higher on getting report of bigger than expected drop in initial jobless claims for the week, while most of the Asian peers ended in green. Back home, the markets that despite remaining in red traded range-bound during the second half, suffered some sell-off in last, before going for a weekend. Though, markets snapped the politically crucial and volatile week with gain of about half a percent. The broader markets that have showed good traction in early trade too lost their direction for the day and closed marginally lower. On sectoral front realty witnessed maximum profit booking, and the metal and banking indices too came under pressure. The IT sector too continued its bear run, losing another one percent as after the fear of Cognizant Tech issuing lower revenue growth guidance for 2013, the Indian behemoth Infosys’ top management indicated that the company may miss its organic growth guidance of 5% for the current year because of delays in decision-making, ramp-downs in certain projects. The Aviation sector gave a mixed response to the Civil Aviation Minister Ajit Singh making a call to state chief ministers to reduce taxes on aviation fuel. The move is aimed at reducing costs for airlines, which accounts for nearly 50 per cent of domestic airlines costs. Finally, the BSE Sensex lost 62.70 points or 0.32% to settle at 19,424.10, while the S&P CNX Nifty declined by 23.50 points or 0.40% to end at 5,907.40.