Markets likely to remain in consolidation mood with a flat start

The Indian markets continued their sluggish trade on Monday and after a choppy session ended marginally in red. Today, the consolidation mood is likely to linger with no any major cue in sight, either from the domestic or from the global front that could support the markets. Traders will now be eyeing Index of Industrial Production (IIP) data for October 2012, to be released on Wednesday, there is general perception that due to the spurt in demand ahead of Diwali and a favourable base effect, a big boost can be seen in the growth of industrial output numbers. The banking stocks are likely to keep buzzing, as the opposition has thwarted the Banking Laws (amendment) Bill 2012 in the Lok Sabha, raising doubts about its being passed in the coming days. The Sugar stocks that came under pressure in last session after the state government of UP raised the prices at which sugar mills buy the new season crop, by up to 16 per cent are likely to remain under pressure. Textile stocks too are likely to come in somber mood, as India’s textile exports declined by 5.9 per cent year-on-year to $14.1 billion during the April-September period. The PSU stocks too are likely to be in action after the government as per its disinvestment programme is going to sell 10 percent stake in the company and has fixed a price band of Rs 145-150 per share, at a discount from its last closing.   

The US markets made a positive start of the new week and all the major indices closed with modest gains as technology shares bounced back after recent weakness. Although, the fiscal cliff stalemate cautiousness remained in the investors mind, as President Barack Obama’s meeting with Republican House Speaker John Boehner to negotiate a budget deal continued. The Asian markets have made a mixed start with some of the indices marginally trading in red in early session.

Back home, recovering from their day’s low Indian markets ended the volatile session flat on Monday led by a rally in public sector banks on hopes that legislation on banking sector reforms would be passed during the current session of parliament. Bourses, throughout the session, traded in the tight band, with crucial levels of 19,400 (Sensex) and 5,900 (Nifty) proving tough nuts to crack, as market participants closely awaited October’s index of industrial production (IIP) data and headline inflation data for November, scheduled to be released later this week on December 12 and 14, respectively, as these will influence the RBI’s stance on policy rates. Confidence of the market participants also remained higher after realty stocks extended recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country. Also, associate banks of State Bank of India gained by 15-20 per cent on fresh buying accompanied by heavy rise in volume. Global cues remained mixed as most of the Asian equity indices ended the session in the green on better-than-estimated US jobs data and China’s factory output and retail sales signaling a faster economic recovery. Back home, the banking stocks showed last hour surge as banks, following the go-ahead by the Reserve Bank of India (RBI), have begun restructuring the loans given to iron ore miners and other stakeholders such as truckers and shipping lines. However, software pack declined over a per cent as stock of the country’s largest IT services company TCS declined by about two and a half per cent extending its past four-days fall on fears of lower revenue growth in next year. Shares of sugar manufacturing companies too remained under pressure during the day’s trade on reports that Uttar Pradesh (UP) has increased State Advised Price (SAP) for sugarcane procurement by more than 15% to Rs 275-290 a quintal for 2012-13 compared to last year. SAP is the price below which mills cannot buy cane from farmers. Finally, the BSE Sensex lost 14.41 points or 0.07% to settle at 19,409.69, while the S&P CNX Nifty gained by 1.50 points or 0.03% to end at 5,908.90.