Markets likely to get a gap-up start on jubilant global cues

The Indian markets lost their momentum in the final hours of last session and despite maintaining modest gains throughout the day, ended lower by about half a percent. Today, the start is likely to be a gap-up one as the global markets are in euphoric mood, however today is the expiry of the June F&O series and that may bring some volatility in the market, as the series is already down by over seven percent and some short covering can be seen. Traders will also be eyeing the movement of rupee, which slumped to its all time in low in last session. Rupee depreciation has become a major concern as it is likely to offset the recent positive developments on the inflation and deficit fronts. Exporters body FIEO has termed the rupee fall, a "serious" matter and has asked traders to use derivatives to hedge the currency risk. Traders are also likely to react to an UNCTAD report that country received 29 percent less FDI inflows in 2012, however an UN economist has said that FDI in India is expected to rise by 15 per cent in 2013 on account of policy initiatives being undertaken by the government. There will be some buzz in the telecom stocks as the ministerial panel has sought telecom regulator TRAI’s opinion on the start or reserve price to be set for forthcoming spectrum auction. TRAI has to give its recommendation within 60 days.

The US markets extended their gaining streak on Wednesday; traders continued picking up stocks at lower levels following the sharp drop seen after Federal Reserve’s monetary policy announcement. The Asian markets have made a jubilant start with some of the indices showing gains of over two percent in early deals after slower-than-estimated growth in the US economy raised speculation that the Fed may hold back from reducing stimulus. Seoul Composite has taken the lead, as South Korea raised 2013 GDP growth forecast to 2.7% from 2.3%.

Back home, Indian equity markets snapped the Wednesday’s trade in the negative territory with a cut of about half a percent as investors opted to stay away from risky assets on the penultimate day of June F&O series expiry. Frontline gauges, after see-sawing in negative and positive zone for most part of the Wednesday’s session, mainly turbo-drove in last leg of trade after Indian Rupee cracked to an all-time level of 60 per US dollar, raising fears over foreign investor outflows in near term. Month-end dollar demand from importers resulted in the rupee touching a new all-time low on June 26 against the dollar. The rupee touched a low of Rs 60.34 breaching previous all-time low of Rs 59.98 hit last week. Investors, however, shrugged-off firm global cues as European markets traded firmly in the early deals with CAC, DAX and FTSE surging over a percentage point, with robust US data supporting sentiment. Back home, sentiments got dented after foreign institutional investors (FII) net sold Rs 105.50 billion in 11 consecutive trading sessions on weakening hopes of rate-cut after currency depreciated nearly 12 per cent in past 2 months. Sentiments also remained dampened after shares related to telecom space declined on reports of likely meeting on the telecom sector on June 26 to decide on spectrum price for the proposed third round of auction of airwaves. Moreover, Bharti Airtel shed over five percent on reports the Department of Telecom (DoT) has decided to slap Rs 650 crore penalty on the company for violating roaming norms in 13 circles between 2003-2005. However, the downside remained capped as buying was witnessed in software and technology counters after the rupee touched an all-time low of 60 versus the dollar on June 26. Losses also remain limited as some support came in on report that government will take a speedy decision on hiking FDI limits, as Finance minister P Chidambaram indicated that a final decision may be taken by the second or third week of July and has asserted that there was no room for pessimism as the fundamentals of the Indian economy are strong. Finally, the BSE Sensex lost 77.03 points or 0.41% to settle at 18,552.12, while the CNX Nifty declined by 20.40 points or 0.36% to end at 5,588.70.