Markets to get a soft start extending last session’s somberness

The Indian markets suffered heavily in last session, though the RBI’s policy review remained in line to the general expectations but its downward revision of GDP growth and raising concern about the inflation, made the investors cautious and they preferred to sell and be on sideline. Today, the start is likely to remain soft and after RBI now all eyes will be on the global events with the Fed announcement after its policy meeting. Traders will also be eyeing the political development, as the UPA and the Congress Working Committee have approved the formation of India’s 29th state ‘Telangana’ out of Andhra Pradesh. Traders will be eyeing the movement of rupee which crashed in last session against the dollar to once again breach the 60 levels in response to the dovish comment by the RBI that it would withdraw its liquidity tightening measures in a calibrated manner. However, traders will be taking some support with Chief Economic Adviser Raghuram Rajan’s statement that government will announce measures to help narrow the current account deficit in the next few weeks, including looking at ways of bringing in foreign investments.

Also, there will be lots of result announcements to keep the markets buzzing. Andhra Bank, Balrampur Chini, Bharti Airtel, Chambal Fertilisers, Gati, HCL Tech, ICICI Bank, JSW Steel, Kesoram Inds, Motherson Sumi and NHPC etc are among the many to announce their numbers today

The US markets made a flat closing on lingering uncertainty about the Federal Reserve’s action post its meeting. The Economic news remained mixed and hardly gave any cue to the markets, though the strength in technology stocks led Nasdaq to a nearly thirteen-year closing high. The Asian markets have mostly made a soft start paring their monthly gains ahead of the US Fed’s policy meeting. Japanese market was trading lower by over half a percent, as yen strengthened against dollar, weighing down the exporters.

Back home, extending their southward journey for fifth day in a row, key domestic benchmarks snapped the Monday’s trade near intraday low with both the frontline gauges tumbling below their crucial 5,800 (Nifty) and 19,400 (Sensex) levels. The selling was both brutal and wide based as, barring software counter, none of the sectoral indices on BSE were spared. Moreover, those counter which featured in the list of worst performers, included Realty, Oil and Gas and Power. Though, markets traded slightly above their neutral lines ahead of Reserve Bank of India’s (RBI) monetary policy review, but once the policy was announced, market entered into negative trajectory and continued sliding till end. RBI left the policy interest rates unchanged in the monetary policy as its priority has switched from reviving an economy growing at its slowest in a decade to supporting a currency that plunged to a record low. Thus for the second time, Repo and Reverse Repo rate were left unchanged at 7.25% and 6.25% respectively. Further, Marginal Standing Facility (MSF) Rate, Bank Rate too have been retained at 10.25% each, while Cash Reserve Ratio (CRR) was held out at 4% of their net demand and time liabilities (NDTL). Meanwhile, downward revision of GDP growth by RBI in its ‘first quarter review of Monetary Policy 2013-14’ too dampened the sentiments. RBI lowered the GDP growth projection for the current fiscal to 5.5% from 5.7%. Moreover, market-men shrugged off positive global leads with most of the Asian equity indices shutting shop in the green as sentiments remained up-beat after Chinese central bank injected funds into money markets. Back home, depreciating rupee too weighed down sentiments, breaching Rs 60 per dollar level for the first time since July 15. The slide of Rupee battered stocks of public sector oil marketing companies as falling rupee raised concerns about increased costs of importing oil. Metal counter too witnessed a cut of around two percent after Sterlite Industries (India) extended recent losses triggered by the company reporting weak Q1 results, while Tata Steel and SAIL hit 52-week low.  Meanwhile, NTPC declined after the company reported a muted growth in bottom-line in Q1 June 2013. Finally, the BSE Sensex shaved off 244.94 points or 1.25% to settle at 19,348.34, while the CNX Nifty plunged by 76.60 points or 1.31% to end at 5,755.05.