Markets to get a recovery dose with FDI approval in different sectors

Indian markets tumbled in last session on local jitters after RBI announced measures to curb the rupee's decline by tightening liquidity and making it costlier for banks to access funds from the central bank. Today, the start is likely to see some recovery, though the global cues are not that favourable but the markets will be taking support from the domestic cues, as in a big ticket reform push, government has opened the foreign direct investment (FDI) gates further in over a dozen sectors, all the sectors included will see some action in today’s trade. The important being the telecom where FDI cap has been raised to 100 percent from 74 percent, Insurance sector FDI limit has been raised to 49 percent from present 26 percent, also FDI up to 100 percent through automatic route has been allowed in courier services. However, FDI cap in defence sector remained unchanged at 26 percent. Meanwhile, the Finance Minister P Chidambaram has said that inflation will come down to tolerable levels if crude prices do not rise again and has also assured that current account deficit (CAD) would be financed without dipping into forex reserves. There will be some buzz in the oil & gas, power and fertilizers sector too, as the Ministerial Panel on Commercial Utilisation of Gas will meet to re-prioritise the domestically produced gas allocation to consuming sectors.

There will be some important result announcements, HDFC Bank, Heritage Foods, Supreme Petro and Zensar Tech will come up with their earnings today.

The US markets gave up some of their gains on Tuesday on renewed concerns about the outlook for the Federal Reserve's stimulus program as traders looked ahead to Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee on Wednesday. The Asian markets have made a cautious start, though most of them are trading in green in early deals, there is some concern related to Fed tapering its stimulus as the Asian region will be the most affected due to it.

Back home, Indian equity indices ended Tuesday’s session of trade on a very depressing note after plunging about a percentage point, snapping three days winning streak. The frontline gauges kept trying hard to recover and move higher but ruthless profit booking capped the pull back, despite this market managed to pare losses of over a percentage point by the end. Sentiments remained subdued from the beginning of the trade as the Reserve Bank of India (RBI) last night came out with a slew of measures, including hiking the lending rates for banks and sucking up Rs 12,000 crore to stem the rupee volatility. This also hurt the banking stocks badly, other rate sensitive counters such as realty and infra too ended with a deep cuts. Sentiments also got clobbered after Asian Development Bank (ADB) for the second time this year, lowered its growth forecast for the South Asia’s largest economy to 5.8 percent from its April estimate of 6.0 percent. Global cues remained mixed, European markets made a flat-to-positive start in the absence of any major trigger and CAC, DAX and FTSE were trading near their neutral line. Asian markets ended mixed as profit-taking weighed on prices after Monday’s gains fuelled by Chinese economic growth data that come in line with forecasts. However, the 7.5 per cent expansion in April-June still represented a second mixed straight quarter of slower growth, highlighting weakness in the world’s number two economy. Back home, nasty selling in Realty and Banking  counters mainly dragged the markets lower as stocks like, Yes Bank, State Bank of India, ICICI Bank HDFC Bank, HDIL, Unitech, Godrej Properties, Sobha Developers etc. tumbled after the Reserve Bank of India announced measures to curb the rupee's decline by tightening liquidity. Gems and Jewellery stocks viz. Titan Industries, Gitanjali Gems and Shree Ganesh Jewellery too ended in the red after India’s gems and jewellery exports nosedived about 41% year-on-year to $2.3 billion in June, 2013 on account of shortage of yellow metal and limited inventory in domestic market. Bucking the trend, telecom stocks like Idea Cellular, Bharti Airtel and Tata Teleservices (Maharashtra) edged higher on reports that Prime Minister Manmohan Singh will meet senior ministers to discuss raising foreign investment limit in a number of sectors, including telecom. Finally, the BSE Sensex shaved off 183.25 points or 0.91% to settle at 19,851.23, while the CNX Nifty plunged by 75.55 points or 1.25% to end at 5,955.25.