Markets likely to get a positive start on supportive regional cues

The Indian markets lost their way in the second half of trade in last session, disappointed by weak earnings announcement of L&T and Asian paints. There was jubilation among the rate sensitives’ in the first half on signs that Reserve Bank of India (RBI) won’t hike the rates after Finance Minister P Chidambaram said that RBI’s move to raise two of its interest rates last week while keeping the main repurchase rate unchanged, doesn’t signal a shift toward a tightening bias. Today, the start is likely to be positive taking cues from the regional counterparts, the rate sensitives’ will continue to move higher. Traders will also be taking some support with Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan’s statement that the Indian economy will grow by 6 percent this fiscal on account of a good monsoon. However, jewelers and the gold related stocks will be in somber mood, as the RBI imposed further restrictions on gold imports by banks and other authorised agencies. However, in other move the apex bank has brought down the period of realisation and repatriation for exporters of goods and software to nine months from earlier 12 months. Steel stocks too will remain under pressure on report that India produced 6.450 million tonnes (MT) steel in June, a mere 0.9 percent growth vis-a-vis 6.392 MT a year ago against world’s average steel production growth by 1.9 percent.

Also there will be lots of important result announcements.3M India, Century Textile, KPIT Cummins, L&T Finance Holdings, Mahindra Forgings and Tata Elxsi are among the many to announce their numbers today.

The US markets, though modestly but ended higher on Monday on the back of some positive earnings report, however on economy front the news was not good, as sales of previously-owned homes fell 1.2 percent in June. Most of the Asian markets have made a good start with some even trading higher by over a percent, after the weak housing sales numbers in US eased the concerns of Fed tapering its stimulus soon.

Back home, extending their consolidation mood for second straight day, Indian equity benchmarks snapped Monday’s trade flat, marginally in the green with frontline indices just managing to hold their crucial 6,000 (Nifty) and 20,150 (Sensex) bastions. Domestic gauges extended their northward journey to touch intraday high in noon deals supported by short covering in banking counter. Investors also piled up positions in Auto related stocks like M&M, Bajaj Auto, Hero MotoCorp and Tata Motors. But, indices pared most of their intraday gain in last leg of trade, as sentiments got dented after Larsen and Toubro (L&T) reported lower than expected Q1 numbers. Global cues remained mixed with most of the European counters opening in the red as traders remained cautious on report that politicians in Portugal failed to reach an agreement over the future of the country’s bailout package. Meanwhile, most of the Asian equity indices shut shop in the green as sentiments remained up-beat after the Japan’s ruling Party coalition easily won a majority of the 121 seats contested in the upper house elections over the weekend. Back home, stocks related to retail space too remained on the buyers’ radar on report that DIPP, in order to accommodate some demands of global retailers, has circulated the draft of a Cabinet note seeking views of different ministries to ease FDI norms in multi-brand segment. Meanwhile, stocks related to software and technology counters remained on the buyers’ radar as Indian rupee continued to lose sheen against dollar. The rupee fell by 21 paise to 59.56 against the dollar at the time of equity market closing at the Interbank Foreign Exchange market on increased demand for the US currency from importers amid a weak opening in local equities. However, the gains remained capped on investors’ cautiousness related to the slow growth in Indirect tax collection. During April-June quarter of current fiscal, the indirect tax collection grew by mere 4.7% to Rs 1.11 lakh crore, mainly on account of decline in excise duty collection. Gains also remained limited after L&T reported weaker than expected Q1 earnings. The company registered a fall of 12.46% in its net profit at Rs 756.03 crore for the quarter ended June 30, 2013 as compared to Rs 863.65 crore for the same quarter in the previous year. Finally, the BSE Sensex gained 9.27 points or 0.05% to settle at 20,159.12, while the CNX Nifty rose by 2.60 points or 0.04% to end at 6,031.80.