Markets likely to get a soft start on weak global cues

The Indian markets continued their southward journey on sluggish global cues and lacking any support from the domestic front on Wednesday. Today, the start is likely to be in red and more down side can be expected on weak global cues. Though, some recovery too can be expected in latter part of the trade after three consecutive days of fall and some short covering at lower levels can be seen. There will be some support to the markets with Finance Minister P Chidambaram’s statement that people should expect more reforms in the second half of the year. The PSU oil marketing companies will be in action, as the finance ministry has agreed to pay Rs 40,000 crore of pending subsidy bill to the public sector oil marketing companies for the last fiscal. As on whole, the FM has agreed to dole out a record Rs 100,000 crore towards diesel and cooking fuel subsidy in 2012-13 but wants pricing formula to be changed from current year to cut down the outgo. There will be some buzz in the power sector too, as the Central Electricity Regulatory Commission (CERC) has said that Coal India should meet the full requirement of coal under fuel supply agreements (FSAs) with power utilities.

Also, there will be some important result announcements to keep the markets buzzing, BHEL, Dish TV India, Hindustan Fluoro, Indraprastha Gas, JSW Steel, NIIT, SBI and Tata Steel will be among the many to announce their numbers today.

The US markets suffered a sharp sell-off on Wednesday on worries about Fed tapering its asset purchase program. However, in its testimony Bernanke seemed supportive of leaving monetary policy unchanged in the near future. Most of the Asian markets have made a soft start after Chinese manufacturing output unexpectedly contracted for the first time in seven months, on the other hand Japanese market gained on speculation that sales at Japanese retailers will increase on a report showing rise in foreign visitors last month.

Back home, Wednesday’s trading session was another disappointing day of trade for the Indian equity markets with frontline gauges declining for third straight day, as investors remained on sidelines ahead of US Federal Reserve Chairman Ben Bernanke’s testimony. Though, markets opened on an optimistic note with both the frontline traded firm in morning trade tailing rally in other regional peers. Sentiments also got a boost by data showing that foreign funds remained net buyers of Indian stocks on May 21, 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 679.44 crore. Supportive cues from US markets provided the much needed support to local markets in first half. However, weakness in European market took their toll on domestic sentiments in second half and dragged the frontline gauges below their crucial 6,100 (Nifty) and 20,100 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets. Selling got intensified at local markets in last leg of trade after engineering and construction major Larsen & Toubro (L&T) reported below expectation profit for the March quarter. The company reported a fall of 6.90 percent in its net profit at Rs 1787.94 crore in Q4FY13 as compared to net profit of Rs 1920.41 crore in the same quarter previous year. Some cautiousness also came in from currency markets as Indian rupee depreciated by 18 paise to 55.59 against the dollar on the Interbank Foreign Exchange on fresh demand for the US currency from importers and banks. Selling was also visible in shares of public sector oil marketing companies viz, BPCL, HPCL and IOC ahead of Petroleum Minister Veerappa Moily’s meeting with Prime Minister Manmohan Singh to discuss fuel pricing policy. However, the losses remained capped as buying was seen in software and technology pack on the back of weak rupee. Some jubilation also came in from buying in sugar stocks like Shree Renuka Sugar, Bajaj Hindustan, Balrampur Chini Mills, EID Parry and Rana Sugars after the Uttar Pradesh cabinet gave in to a long-standing demand by the sugar industry to extend stamp duty and land registration waivers to existing as well as new sugar mills. Finally, the BSE Sensex lost 49.37 points or 0.25% to settle at 20,062.24, while the CNX Nifty declined by 19.60 points or 0.32% to end at 6,094.50.