Markets likely to get a flat start; inflation data eyed

The Indian markets ended lower in last session, showing similar trend of declining after a good start, however lacking any cues the markets looked fatigued and broader indices suffering major cut. Today, the start is likely to be flat though markets may see some recovery as well, after the government swinging into action announced steps to accelerate approvals for mega projects, and approved a new law for land acquisition. The bill was given the go-ahead at the Cabinet meeting presided by Prime Minister Manmonan Singh, making mandatory the consent of 80 per cent of people whose land is taken for private projects. Traders will also be eyeing the important event of inflation numbers, scheduled to be announced later in the day, however it is likely that inflation picked up in November as imported fuel got costlier due to weak rupee. Inflation grew at 7.45 percent in October and is likely to increase to 7.60 percent in November. There will be buzz in the markets, as SEBI has announced a series of measures to prevent flash crash. The telecom sector too will be in action, as the Government announced that nationwide mobile number portability (MNP) is expected to be rolled out by February.

The US markets closed lower on Thursday, losing their pace in final hours as ongoing jitters over the “fiscal cliff” negotiations kept investors nervous and they over looked Jobless claims report which fell for the fourth-straight week and rise in retail sales in November. The Asian markets are trading mixed, though some of the indices have recovered after a flash PMI data showed recovery in Chinese manufacturing, on the other hand the Japanese market was in losers list on report that showed worsening confidence among manufacturers in Japan.

Back home, Indian equity indices, erasing all their good work in initial trade, ended the session in the red for fifth consecutive trading session on Thursday as investors sold-off riskier assets in late trade amid fears that country’s headline inflation may quicken further in November, thereby deterring the Reserve Bank of India from cutting interest rates in the monetary policy next week. Sentiments also remained fragile in absence of any constructive work being done in Parliament, with Samajwadi Party (SP) creating a ruckus over the quota bill and an angry deputy chairman PJ Kurien asking that its member be evicted. Supportive cues from Asian markets provided the much needed support to local markets in first half with most of the Asian equities ended in the green after the US Federal Reserve took new stimulus steps to bolster the economy. Back home, fall of over two and a half percent in FMCG segment did the major damage to the markets with Hindustan Unilever down by about two per cent for the second day, on concerns that it may face higher royalty payments to its parent Unilever PLC. Concerns came after Unilever Indonesia agreed on December 12 to pay a higher royalty payment to the parent company. Some selling was also witnessed in banking stocks, namely, HDFC Bank, SBI, Canara Bank and Bank Of India on dampened hopes of rate cut, with investor’s now turning focus to November Inflation, due to release on December 14, 2012. Some selling pressure intensified after cement companies like ACC and Ambuja Cements, both Holcim Group companies, dipped almost 2 per cent each in late noon deals after ACC said its board has approved for payment of 1 per cent of the net annual sales of the firm as technology and know-how fees to Switzerland’s Holcim with effect from January 1, 2013. Additionally, Telecom stocks staged a mixed close ahead of government meeting for discussing the recommendations made by the Empowered Group of Ministers (EGoM) on pricing of spectrum that remained unsold in the recently conducted auction on November 14, 2012. Finally, the BSE Sensex lost 126.00 points or 0.65% to settle at 19,229.26, while the S&P CNX Nifty declined by 36.50 points or 0.62% to end at 5,851.50.