Markets to continue their bear run on sluggish global cues

The Indian markets despite their initial effort could not break the jinx of ending in red and lost over a quarter percent in last session. Apart from the global cues, the weak sentiments on the domestic economic front weighed on the markets. Today, the start is likely to remain on a soft note, though traders may take some support with Chief economic advisor Raghuram Rajan’s statement that despite the disappointing GDP growth there was enough in the details to give hope that economy will look up.He expressed hopes on good rabi crop that will come to market in the first quarter, higher government spending and strong finance, real estate and insurance sector. Traders will also be watching the movement of rupee, which recovered in last session along with bonds after the RBI announced resumption of debt purchases after nearly a month. There will be action in the realty sector after the government approved a Bill for setting up a regulator for the real estate sector with provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly. There will be some buzz in the oil & gas sector too, as the government is gearing up for NELP-X this fiscal and has carved out exploration area of about 2.7 lakh sq km.

There will be some stock specific reactions in the market after the market regulator Sebi barred promoters of companies which failed to comply with its 25% minimum public shareholding norms by denying partially their rights to dividend, bonus and voting.

The US markets ended lower on Tuesday led by uncertainties on the outlook for the Federal Reserve’s asset purchase program. Some comments of the Fed officials raised the speculation that the central bank may taper the program within the next meetings. The Asian markets have made mostly a soft start on weak US cues; the Japanese market was a bit cautious ahead of Prime Minister Shinzo Abe’s speech on his economic-growth strategy.

Back home, Tuesday’s trading session turned out to be a disappointing session of trade for the Indian equity markets, as traders opted to book their initial profits in absence of any major positive trigger. The frontline gauges, after a positive start, remained range-bound for most part of the session and drifted to lower levels in the last leg of trade to settle with cut of about half a percent. Though, the bourses tried to keep their head above water but, the psychological 19,700 (Sensex) and 6,050 (Nifty) levels proved as stern resistances as the key indices could not claw beyond those levels, instead drifted lower. Sentiments got dampened after rate-sensitive banking sector tumbled around a percent after Reserve Bank of India (RBI) said it plans to take early action against banks whose officials were recently caught on tape in a sting operation willing to indulge in serious violation of banking norms. However, global markets remained firm with European counters opening higher led by chipmaker STMicroelectronics after it guided for full-year order growth. Back home, selling was also seen in Auto space as stocks like Maruti Suzuki and Tata Motors edged lower on reporting weak sales figure for the month of May. Shares from realty counter too ended mostly lower ahead of Union Cabinet meeting in which it will consider a bill to set up a regulator for the real estate sector with provisions for jail term for the developer for putting out misleading advertisements about projects. Additionally, Jewellery stocks viz. PC Jeweller, TBZ and Titan Industries came under pressure towards end of the trade after RBI said that it would extend the restrictions on the import of gold on consignment basis by banks to all nominated agencies and trading houses.  However, losses remain capped as some support came in after select non-banking financial companies which are likely to foray into the banking space gained during the trade after the Reserve Bank of India which had issued final guidelines for issuing new banking licences on February, came up with clarifications to various queries on Monday. The central bank said applicants getting permits to set up new banks would have to do so within 18 months. Finally, the BSE Sensex lost 64.70 points or 0.33% to settle at 19,545.78, while the CNX Nifty declined by 19.85 points or 0.33% to end at 5,919.45.