Markets to get a good pull back after last session’s fall

The Indian markets plunged once again in last session and the major indices lost over a percent on global concern, across the board selling led the markets to their lowest in last two months. Today, pull back can be expected and some buying at lower levels can be seen supported by positive regional cues. Traders may get some support with the statement of Reserve Bank of India (RBI) Deputy Governor Anand Sinha that the government and the central bank are taking all possible steps to get a control over the economy; he also said that financial sector is bound to grow in tandem with the growth of the real economy. The gold jewellary stocks are likely to remain buzzing, as the government has slashed the import tariff value of gold to $421 per ten grams and that of imported silver to $709 per kg, considering the falling trend in global prices. The ailing housing and infra stocks too are likely to rejoice as the RBI has said that developers building low-cost or affordable houses can avail of foreign currency loans on softer terms than other builders of real estate. There will be some buzz in the coal and power sector too, as the Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has said that domestic production of the dry fuel should be increased to lower reliance on imports.

The US markets despite a good recovery could not manage a green close on Monday and extended their downward move seen last week with all the major indices losing another about a percent. The Asian markets are showing some recovery in the early trade with majority of the indices trading in green, though the Chinese market was still in red on concern of a potential liquidity crunch in the country after the People’s Bank of China declined to inject money into the financial system.

Back home, Monday turned out to be a disappointing session of trade for the Indian equity markets, as market participants booked all their gains garnered in previous session on account of feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and continued sliding till end, closing near the lowest point of the day with both the frontline gauges tumbling below their crucial 5,600 (Nifty) and 18,550 (Sensex) levels. Selling was both brutal and wide-based as none of the sectoral indices on BSE was spared. Counters, which featured in the list of worst performers, include realty, consumer durables, capital goods and public sector undertakings. Some pressure also came in after data showed that foreign funds remained net sellers of Indian stocks on June 21, 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 1768.60 crore on the same day. Sentiments also remain dampened after shares of the companies engaged in gems and jewellery business remain under pressure on the bourses and ended lower by up to 20 percent, on concerns that the Reserve Bank of India and government initiative to curb gold imports may impact the sector’s growth. Global markets remained turbulent after the Fed announcement last week that the economy looked in good enough shape for it to start rowing back on its $85-billion-a-month bond-buying scheme. Back home, sentiments also got dented after Indian rupee weakened during the trade, hovering near a record low hit last week, as worries about China’s economic and financial stability hit global risk assets, while caution prevailed ahead of current account deficit data due this week. The rupee was trading at 59.81/82 to the dollar at the time of equity markets closing, compared to its close of 59.27/28 on Friday. Fall in metal counter too hurt the sentiments as a recent spike in Shanghai interbank interest rates fueled worries about the world’s second-largest economy. China is the world’s largest consumer of copper and aluminum. Additionally, shares of oil exploration firms declined as crude oil prices fell. Lower crude oil prices would result in lower realizations from crude sales for oil exploration firms. Finally, the BSE Sensex shaved off 233.35 points or 1.24% to settle at 18,540.89, while the CNX Nifty plunged by 77.40 points or 1.37% to end at 5,590.25.