Markets likely to get a positive start; IIP data eyed

The Indian market continued their sluggish trades on Tuesday, closing marginally lower for yet another day. Though, the trade remained firm in first half, the concern of banking amendment law not being passed in parliament weighed in the second half. Today the start is likely to remain cautious but positive, tailing the good global cues, while investors will keep a close eye on IIP data for the month of October. It’s being said that India’s industrial production likely increased by 5.3-5.4 per cent, its fastest annual pace in nearly a year after shockingly contracting by 0.4 per cent in September. The next half of the trade will be solely guided by the numbers. Though there is likely to be some cautiousness as Standard & Poor’s has warned again that India still faced one-in-three chance of downgrade in its sovereign rating to junk grade over the next 24 months. The retail and bank stocks are likely to remain under pressure due to the Banking Laws (Amendment) Bill and Walmart row in the parliament. There will be buzz in the PSU OMC stocks as the petroleum minister Veerappa Moily has announced that the government plans to increase the cap on subsidized LPG cylinders from 6 to 9. However, the Election Commission has sought an explanation from the Union petroleum minister, Veerappa Moily, by Wednesday evening for his announcement about raising the cap in view of the state elections in Gujarat

The US markets extended their gains on Tuesday taking positive cues from some upbeat economic data from the Europe and hopes that Fed will announce a new round of Treasury bond purchases when its two days meeting ends on Wednesday. Asian markets have made a jubilant start with some of the indices trading higher by over half a percent.

Back home, volatility witnessed in the second half of the trade, washed out all the early gains of the Indian equity markets, leading to negative close, with frontline indices snapping below crucial 5,900 (Nifty) and 19,400 (Sensex) levels, despite getting a promising start. The domestic bourses had capitalized on the initial momentum, hitting their highest level in more than 23 months, but lost their direction in afternoon trades after banking space lost its sheen as both Houses of Parliament were adjourned before taking up the Banking Amendment Bill. The Banking Amendment Bill entails easing voting rules of shareholders in banks to attract foreign investment and allows the central bank more powers. The benchmark equity indices that were trading with over a percent gain in mid morning trades trimmed most of them and touched the lowest levels in the mid noon session as traders cited renewed concerns about current account deficit after data on Tuesday showed exports fell 4 percent to $22.3 billion in November, while imports jumped to $41.5 billion, leaving a trade deficit of $19.3 billion. Traders focused on the outcome of factory data on December 12, 2012 and inflation data on December 14, 2012, which are coming ahead of RBI’s probable rate-setting, meet on December 18. Selling pressure continued in late trade as stocks from realty space were hammered badly due to profit booking after recent strong gains. Some amount of pressure also came in after Auto counter lost their momentum on SIAM’s report that sales in passenger car segment dropped by 8.25 per cent to 1.58 lakh units last month from 1.72 lakh units in the same month last year. Additionally, shares of organized retailers declined for the second straight day as uproar continued in Lok Sabha over the Walmart lobbying report. Software and technology counters too declined about a percent on the back of a strengthening rupee against the US dollar. The rupee was trading at 54.30 in intra-day trade at the time of equity markets closing. However, Markets witnessed slight recovery in late trade to end below their pre-close level supported by firm opening in European markets. Finally, the BSE Sensex lost 22.55 points or 0.12% to settle at 19387.14, while the S&P CNX Nifty declined by 10.10 points or 0.17% to end at 5,898.80.