Indian markets to get a flat-to-cautious start of the new week

The Indian markets remained in consolidation mood in last session, though major indices were able to enter the green in last but the better than expected manufacturing data was unable to make much impact and the traders largely concentrated on the US development where there were talks of Fed not continuing the bond buying programme for long. Today, the start is likely to be cautious as the regional markets are trading mixed and traders will be eyeing important events like IIP numbers and result announcements starting with IT bellwether Infosys later in the week. Though, there is not much expectations from the December quarter but some companies may surprise with better topline. Meanwhile, the PSU oil & gas companies will keep buzzing as the oil ministry has moved two separate cabinet notes - one to raise cap on supply of subsidised cooking gas cylinders and the other to increase fuel prices, particularly diesel, by less than a rupee per month to pair it with market rates and eventually deregulate it in next 15 months. While, there is some good news for the auto stocks, as it has been reported that in the Budget 2013-14 the Heavy Industries Ministry may pitch for lowering excise duty on two-wheelers and motor vehicles, especially small cars in order to boost sagging demand.

The US markets ended higher on Friday supported by some good economic news, the positive news from the jobs front gave investors confidence that the economy was back on track. The Asian markets have made a mixed start of the new week and some of the indices are down by about half a percent in early trade. Japanese market was showing some profit booking after the biggest first day gain of the year.

Back home, key domestic benchmark witnessed another day of consolidation with both the frontline indices managed to keep their head above water on last trading day of the week. Buying which emerged in late trade, largely supported by rally in oil companies, mainly acted as saving grace for domestic equity markets. PSU oil marketing companies viz. BPCL, HPCL and IOC edged higher on reports that the petroleum ministry has proposed a gradual rise in diesel prices, by 1 rupee a litre every month over a 10-month period. The local gauges pulled back after breaching below 19,700 (Sensex) as investors continued piling up positions in software and technology stocks on hopes of better third quarter earnings. Infosys, the bellwether stock of the technology index, will release results on January 11, 2013. However, the domestic bourses traded choppy throughout the day as global risk appetite was slightly frail after several Federal Reserve officials expressed concerns about continuing to expand stimulative bond buying on Dec 3 FOMC meet. Back home, market-men got some support from HSBC’s Services Purchasing Managers Index (PMI) for December which stood at 55.6, up from 52.1 in the previous month, signaling a sharp expansion in activity. Rally in state-run upstream oil companies too aided the sentiments as stocks of ONGC and Oil India surged after committee set up under the chairmanship of C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister to look into the Production Sharing Contract Mechanism in petroleum industry, suggested major changes in the current Production Sharing Contract Mechanism and changes in gas pricing. Shares of gold loan firms like Manappuram Finance, Muthoot Finance and Muthoot Capital Services extended their Thursday’s gains triggered by the Reserve Bank of India proposing an increase in the loan-to-value ratio on gold loans to 75% from 60% currently. However, selling witnessed in metal space and stocks like Sesa Goa, Sterlite Industries, Hindalco, Tata Steel and Hindustan Zinc all tumbled as LMEX, a gauge of six metals traded on the London Metal Exchange, fell 1.18% to 3,539.60 on January 3, 2013. Finally, the BSE Sensex gained 19.30 points or 0.10% to settle at 19,784.08, while the S&P CNX Nifty rose by 6.65 points or 0.11% to end at 6,016.15.