New series likely to get a flat-to-positive start

The Indian markets ended lower in last session after witnessing final hour volatility due to F&O series expiry. Today, the start is likely to remain cautious, though the new series is likely to make a flat-to-positive start, all eyes will be on the global developments and the trade is likely to remain range bound. Traders will be pondering over Prime Minister Manmohan Singh’s statement terming growth target of 8% for the 12th Five-Year Plan period as “ambitious”, and warning against business-as-usual, policies while pitching for tough decisions, especially on energy prices. However, Prime Minister said that return to rapid growth was necessary to achieve inclusiveness, and the 12th Plan strategy contains many elements that will ensure it. There will be buzz in the power sector, as the Prime Minister Manmohan Singh has directed the Planning Commission to make a quick review of fuel shortages faced by power plants. The PSU oil marketing companies are likely to see some action after the petroleum ministry proposed a gradual rise in diesel prices, by 1 per litre every month over a 10-month period. There will be buzz from the primary market, Bharti Infratel is set to list its equity shares on the bourses.

The US markets made some recovery in last hour of trade to end marginally lower on Thursday on report that the House of Representatives will reconvene on Sunday evening to resume talks to avert the "fiscal cliff". Jobless claims falling to lowest in over four years too supported the markets. Most of the Asian markets have made a positive start, Japanese market has taken the lead as yen continued its slide against the US dollar and weak economic data triggered hopes of some stimulus from central bank.

Back home, December series futures and options expiry turned out to be an extremely disappointing affair for the Indian stock markets as the benchmarks capitulated to the unrelenting selling pressure amid extremely high volatility. The hefty sell-off witnessed in last leg of trade dragged the key indices below the psychological 5,900 (Nifty) and 19,350 (Sensex) levels. Investors resorted to ruthless position squaring from the Oil & Gas, Software, metal and technology counters in the last half an hour, ahead of the F&O series expiry. The final day of the 2012’s last F&O series saw Indian benchmark indices collapsing by over a half a percent as investors rolled over their portfolios for the fresh January series coupled with looming uncertainty over a US fiscal-cliff resolution. Moreover, risk appetite remained frail on fear that US may slip into recession as US fiscal-cliff talks stalled. However, most of the Asian equity indices ended the session in the green. Back home, market made a sedate start with positive bias after government announced sops for exporters and hopes of more steps from the RBI to ease the liquidity situation influenced the trading sentiments. However, the sentiments turned cautious on report that Planning Commission is likely to seek the National Development Council’s nod to lower the average annual growth rate for the 12th Plan period to 8 per cent from 8.2 per cent to make it more realistic.  Some amount of selling pressure also came in from software pack as investors shrugged off IT stock on the last day of December derivatives expiry as concerns over companies’ profitability in the coming quarters weighted on sentiments. FMCG pack too declined by over half a percent on the back of profit booking after two days rally in previous sessions. However, the losses remain capped up to certain limit as auto stocks surged ahead of auto companies unveiling sales data for December 2012 from January 1, 2013. Oil exploration stocks like ONGC and Oil India edged higher as US crude oil futures traded near the highest level in 2 months as US lawmakers prepared to resume budget talks to meet a year-end deadline. On the F&O front, Nifty and Sensex, for December series, registered gains of 0.7% each, as against 2.10% profit in November series. Moreover, in the broader markets, CNX Mid Cap index garnering gains of over 4.7% not only outperformed frontline equity indices, but also BSE Smallcap index, which ended with gains of over 1%. Finally, the BSE Sensex lost 93.66 points or 0.48% to settle at 19,323.80, while the S&P CNX Nifty declined by 35.50 points or 0.60% to end at 5,870.10.