Markets to get a soft-to-cautious start of the new week

The Indian markets got some respite in the last session as the rupee recovered and traders went for some value buying, but today the start is likely to remain cautious and a bit soft taking cues from the global markets. Being the F&O June series expiry later this week, the trade may turn volatile too, though traders will watch rupee movement to take any further cue. There will be some buzz in the market, as the Arvind Mayaram committee, set up to liberalise the country's foreign direct investment (FDI) policy, has recommended nine sectors including FM radio, uplinking news & current affairs, print media (news & current affairs), commodity exchanges, stock exchanges along with depositories and clearing corporation, power exchanges, petroleum & natural gas refining, insurance, defence production and private security agencies as those where 'Indian ownership' and ‘control’ will be mandatory. However, mining companies may get some support with Finance Minister P Chidambaram’s statement that mining minerals are needed for development. Pharma companies too may rejoice with a report that despite weak market conditions, domestic pharmaceutical market reported growth of 6.8 percent in the month of May.

The US markets made a mixed closing on Friday, though there was nothing new either from the government or the economy front but the traders remained concerned about the Fed pruning its stimulus measures soon. The Asian markets have made mostly a weak start led by the Chinese market amid cash crunch at the banks and after an investment banker lowered its 2013 growth estimates for the country, citing weaker economic indicators and tightening of financial conditions.

Back home, key domestic benchmarks, after witnessing around three per cent slump in previous session, exhibited decent pull back in Friday’s trade with frontline indices managing to keep their head above water supported by recovery in dying hour. Earlier, markets kick-started the session in negative terrain tailing weakness in global equity indices. Sentiments also remain dampened after foreign institutional investors (FIIs) sold shares worth a net Rs 2094.06 crore on June 20, 2013. Cautiousness also crept in on report that India’s employment rate has slipped to 38.6 per cent in 2011-12, from 39.2 per cent in 2009-10. The number of unemployed rose to 10.8 million in January 2012 from 9.8 million in January 2010. Also, the retail inflation based on Consumer Price Index for agricultural labourers rose to 12.7 percent in May from 12.32 per cent in April, due to rise in the prices of food items and fuel. Sentiments also remained down-beat after most of the Asian equity indices shut shop in red as investors remained cautious about the implications of the Federal Reserve’s plan to wean off the US economy’s dependence on cheap money. Back home, pull-back witnessed in Indian rupee was the saving grace for the Indian equity bourses. Rupee recovered today after diving to a record low of 59.9850 to the dollar on Thursday, following a hawkish US Fed statement. Finance Minister’s statement that there is no need to panic over the rupee’s fall too provided some solace. He assured that policymakers were monitoring the rupee and would do whatever was needed to stem the fall. Some support also came in from rally in shares of power generation companies like, Torrent Power, GVK Power & Infrastructure, NTPC, Adani Power, Reliance Infrastructure and Reliance Power which edged higher after the Cabinet Committee on Economic Affairs (CCEA) cleared a proposal to allow power companies to pass on cost of imported coal to customers. However, gains remain capped after metal stocks continued to remain lower for second consecutive day as stocks like Hindalco, Jindal Steel & Power, Tata Steel, NMDC, Sesa Goa, Nalco, SAIL and Sterlite Industries edged lower on concerns about the health of the Chinese economy after a survey showed further slowdown in China’s manufacturing sector in June 2013. Finally, the BSE Sensex gained 54.95 points or 0.29% to settle at 18,774.24, while the CNX Nifty rose by 11.75 points or 0.21% to end at 5,667.65.