Markets likely to start the new week on soft note

The Indian markets extended their gains in last session on supportive global cues. Today, the start is likely to be soft-to-cautious for the domestic markets, as the mood across the region is somber on US concerns and all the emerging markets are likely to get impacted if Fed starts tapering its $85-bn monthly bond purchase plan. Traders will be watching rupee movement, as the dollar has strengthened with good jobs data, putting further strain on the rupee as outflow of foreign funds from emerging markets may increase. Meanwhile, a CII survey too has stated that unless the government tackles issues like dwindling FDI flow and high current account deficit, the rupee will continue to remain volatile and may depreciate further. However, traders will now be eyeing the IIP numbers and the start of the earnings season later this week. The oil companies will be in limelight on buzz that the government is likely to alter the way diesel and cooking fuels are priced to reduce its subsidy burden. The power sector stocks too may see some action, as the Heavy Industries Ministry has sought the Prime Minister’s intervention for making domestic sourcing of equipment mandatory in new Ultra Mega Power Projects (UMPP).

The US markets surged on Friday on getting better than expected jobs data, though the unemployment rate remained unchanged but in June the jobs creation was good. However, the Asian markets have not responded positively to the US economic reports and barring Japan all the other indices in the region are trading with big cuts on concern that in view of improving economy Fed may start tapering its bond buying program soon.

Back home, Benchmark equity indices, protracting previous session’s euphoria, went on gaining ground fervently, to conclude the trade with a gain of about half a percent. The frontline gauges gained for the fifth out of last seven trading sessions mainly buoyed by firm cues from other Asian markets. Domestic bourses jumped nearly two hundred and fifty points or over one and a half percent on the opening in line with firm trend in Asian region. Sentiments also remained up-beat as foreign institutional investors (FIIs) once again remained net buyers and bought shares worth Rs 164.56 crore on July 4, 2013. The frontline indices managed to hold on to the momentum for most part of the morning session but profit booking emerged at higher levels, bringing the indices off the day’s high. Depreciation in Indian rupee too weighed on investors’ sentiments. Firm opening in Asian equity indices provided much needed support to domestic markets initially. Back home, rally in metal counter helped the up-move with stocks like, Jindal Steel, Sterlite Industries, Sesa Goa and NMDC edging higher amid expectations for easy monetary conditions at global central banks. Sentiments also remained up-beat as investors continued to pile-up positions in FMCG stocks. Dabur, Marico and GSK Consumer Healthcare edged higher on the back of early arrival and prospects of a good monsoon, which raised expectations of growth in uptake in rural areas that account for up to 50 per cent of their sales. Buying was also visible in sugar sector, as stocks such as Bajaj Hindustan, Renuka Sugars surged on reports that the government has decided to raise the import duty on the sweetener to 15 per cent from 10 per cent currently. The move is aimed to discourage overseas buying amid a drop in local prices due to ample supplies. Meanwhile, Oil and Gas shares rebounded from their lows after witnessing profit taking in the last sessions. Finally, the BSE Sensex gained 84.98 points or 0.44% to settle at 19,495.82, while the CNX Nifty rose by 30.95 points or 0.53% to end at 5,867.90.