Markets to get a cautious start of new week

The Indian markets got a relief rally on Friday after a series of battering and the benchmarks surged by close to three percent on short covering and value picking. Today, the start is likely to remain cautious and lot will depend on European market movements in the noon trade, also on domestic front the rise in weekly inflation numbers and the announcement of IIP and WPI monthly inflation numbers during mid of the week will keep the investors cautious. Meanwhile the telecom stocks will be in lime light as the government will unveil a much-awaited new telecoms policy today, which is expected to include revised rules on grant and pricing of second-generation radio airwaves. On the same time the European crisis beaten IT companies are likely to get some breather as the Telecoms and Information Technology minister Kapil Sibal has said that India will consider giving tax sops for information technology companies after the direct tax bill comes into affect. There will be lots of scrip specific actions, though the official result season will kick start with Infosys numbers on October 12 but few of the important companies will be announcing their 2nd quarter results today.

The US markets, after three consecutive sessions of green closing, marginally slipped into red in Friday’s trade, though the domestic economic news were positive but the rating downgrade of Italy and Spain in Europe made the investors cautious and they avoided riskier asset classes. The Asian markets have made a mixed start, while the Chinese market is trading with marginal cut after a weeklong break on reports of slump in housing sale; some of the other markets in the region are trading in green.

Back home, Indian equity indices staged a blockbuster performance on the last day of the week by vehemently rallying close to a three percentage points in the session and re-conquering their psychological levels. The frontline indices took the quantum leap and halted the four successive session southbound journey but failed to completely regain the ground lost since the start of the week. Except for some mild profit taking in afternoon trades, Friday’s session remained a day of recovery as key equity indices enthusiastically rallied through the day since investors largely focused on covering hefty short positions that got build this week amid easing Euro-zone worries. The concerns over the financial situation in Europe showed signs of easing after the European Central Bank announced various policy measures aimed at raising liquidity in European banks, including the offer to flood banks with any amount of one-year loans through 2013. Back home, India’s weekly food inflation, measured by WPI, surged to 9.41% for the week ended September 24 from 9.13% in the last week however, the primary articles group which has the highest weightage in WPI, declined by 0.1 % to 202.4 (Provisional) from 202.7 (Provisional) for the previous week. Earlier on Dalal Street, the benchmark got off to a boisterous start as the indices rebounded by over two and half a percent in the opening trades a day after Dussehra holiday, following the strong overnight rally on Wall Street since Europe stepped up efforts to bolster its banks and jobless claims rose less than expected. The key indices soon capitalized on the momentum and touched intraday highs in early morning session but the indices failed to hold onto the highs and receded to intraday lows in noon trades post weak European market opening and on reports of downgrade in British and Portuguese banks’ ratings. Yet, final hour buying ensured that the key indices do not shut shops way below the intraday highs and snap the four session declining streak. Eventually the NSE’s 50-share broadly followed index Nifty, convalesced by close to three percent to settle below the crucial 4,900 support level while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated close to four hundred and fifty points and closed below the psychological 16,250 mark. Moreover, the broader markets too participated in the rally and closed with gains of over a percent. On the BSE sectoral space, hefty buying was evident across the board as not even a single sectoral index went home in the negative territory. Finally, the BSE Sensex jumped 440.13 points or 2.79% to settle at 16,232.54, while the S&P CNX Nifty surged by 136.75 points or 2.88% to close at 4,888.05.