Markets likely to get a soft start on weak global cues

The Indian markets plunged on global concern in last session. The mood still remains the same and the indices are again likely to make a soft start. To add woes to the wound, Fitch Ratings has revised downwards the growth projection for the Indian economy to 7.5 per cent this fiscal due to weak global situation coupled with domestic concerns arising from inflation and series of rates hikes. On the other hand PSU oil companies are likely to remain in jubilant mood as the global crude prices has declined further. There will be some concern about the widening trade deficit; Exports grew by 44.2 per cent to $24.3 billion in August, while imports also grew by 41.8 per cent to $38.4 billion during the month, widening the trade deficit to $14 billion as per the commerce ministry data released on Monday. However, individual stock actions will keep the markets buzzing today.

Meanwhile, Reserve Bank of India’s governor D Subbarao will hold a customary pre-policy meeting today with the chiefs of some of the large commercial banks and will try to gauge bankers' view on liquidity conditions, credit demand and expectations of bankers from the central bank.

There is one new listing today, Construction company Prakash Constrowell will make its debut on the bourses. It has fixed the issue price at Rs 138, higher end of price band of Rs 130-138 per share. The issue was subscribed 2.21 times. The portion reserved for qualified institutional buyers (QIBs) was subscribed 0.31 times, while that of non institutional investors was subscribed 2.76 times. Retail individual investors category got 4.68 times subscription. The company is engaged in the business of infrastructure development and civil construction.

The US markets snapped the first day of the final quarter on a dismal note with major indices losing 2-3 percent for the day. Though there was a slew of good domestic economic news, as US construction spending showed an unexpected rebound in August, auto sales rose almost 10 percent in September and the Institute for Supply Management's index of US factory activity expanded to 51.6 in September. But markets remained concerned with Greece’s acknowledgment over the weekend that it would miss its deficit-reduction targets for this year and next. The Asian markets have again made a weak start and Korean market is leading the pack after a long weekend with a cut of over 4 percent.

Indian benchmarks started the new month on a disturbing note as they went on to extend the declining streak for the second successive session as market participants resorted to hefty across the board position squaring. The frontline indices shaved off about two percentage points and breached 16,200 (Sensex) and 4,850 (Nifty) levels on the downside. Sentiments remained dismal as worries over global economic growth prospects prompted marketmen to take profits off the table amid little signs of supportive leads. Investors opted hefty risk aversion, stoking renewed fears that Greece is likely to default on its debt. Reports suggested that Greece failed to meet this year's deficit target of 7.8 percent, due to a deeper than expected recession and its deficit for 2011-2012 is expected to reach 8.5% of GDP, or $25.2 billion. Earlier on Dalal Street, the benchmark began the October month on a somber note, investors largely remained influenced by the daunting sentiments prevailing in Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Though the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of about two percent to settle below the crucial 4,850 support level while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by three hundred points and closed above the psychological 16,150 mark. Moreover, the broader markets too failed to show any kind of fervor and closed with losses of over one and half a percent. On the BSE sectoral space, the high beta - realty and Metal pockets remained among top laggards in the space as they got lacerated by over four percent while sectors like rate sensitive Bankex and Capital Goods too got pounded heavily in the session. Though there were no sectoral gainers in the space, however, Anil Dhirubhai Ambani Group’s stocks like Reliance Communications, Reliance Capital, R Power and Reliance Infrastructure climbed higher on short-covering after the recent brutal sell-off in those shares. The ADAG pack moved higher on reports that CBI has given a clean chit to ADA group chief Anil Ambani on charges that they held shares in firms linked to Swan Telecom. Also good monthly sales numbers from Automobile majors too helped the Auto index on the BSE to pare most of the losses and settle with moderate losses. Finally, the BSE Sensex shaved off 302.31 points or 1.84% to settle at 16,151.45, while the S&P CNX Nifty plunged by 93.75 points or 1.90% to close at 4,849.50.

The US markets tumbled on Monday, sending the major indices to their lowest closing levels since September 2010, as worries over Greece’s debt crisis overwhelmed a report showing slightly stronger US manufacturing activity. The index tumbled at start on worries that Greece would fail to get its next round of bailout aid on time, bringing the country closer to default, but market edged little after the release of the manufacturing data. German Finance Minister Wolfgang Schaeuble opposed moves to increase the scale of the euro rescue fund. Greece too stated that it would miss its deficit target this year. Meanwhile, the latest manufacturing index released by the Institute for Supply Management for September increased to 51.6% from 50.6% in August and new orders were steady. Also, the Commerce Department stated that spending for construction projects rose 1.4% in August, compared with an expected decline of 0.3%.

The Dow Jones industrial average lost 258.08 points, or 2.36 percent, to 10,655.30. The Standard and Poor's 500 closed lower by 32.19 points, or 2.85 percent, to 1,099.23, while the Nasdaq composite lost 79.57 points, or 3.29 percent, to 2,335.83.

Crude prices sink further on Monday on heightened concerns about euro-zone debt problems and the possibility of a default by Greece that pressured oil and supported the dollar. Traders were closely watching the events in Europe, where concerns are mounting following news that Greece will miss its deficit targets this year, which in turn will curb economic growth and weaken demand for crude oil. Investor risk appetite soured again as the euro fell to more than 8 month low against the dollar on concerns about Greece.

Meanwhile, the crude prices were also under pressure due to the faster-than-anticipated return of Libyan crude exports. Although front-month Brent remains above $100 a barrel, the December and January contracts have slipped below the important psychological levels.

Benchmark crude for November delivery settled at $77.61 a barrel, falling $1.59, or 2.01 percent, after trading in a range from $76.85 to $79.64 on the New York Mercantile Exchange. In London, Brent crude for November delivery settled at $101.71, down by $1.05 or 1.02 percent on the ICE.