Markets to get a positive start on supportive global cues

The Indian markets went through huge volatility and the benchmarks despite a good start could not get a green closing at the end. Though, the global cues were good but the domestic markets looked embroiled in their own local issues. Today, the start is likely to be good tailing the upbeat mood of the global markets, there will be shine in the commodity stocks on reports of manufacturing growth across the globe especially China. Though, there will be come concern on the domestic front as the Reserve Bank of India (RBI) governor D Subbarao  has said that maintaining a stable exchange rate is important for growth, last day the central bank has further tightened norms for hedging rules for foreign institutional investors. There will be buzz in the telecom stocks, as the government has approved 100 percent foreign direct investment (FDI) in the telecom sector. Retail related stocks too are likely to remain jubilant after government relaxed investment norms in multi-brand retail. The Cabinet headed by Prime Minister Manmohan Singh diluted the mandatory 30 percent local sourcing norms for multi-brand retailers and permitted states to include cities with population less than 1 million for allowing multi-brand retailing. However, there will be some pressure on the PSU oil marketing companies due to the surge in global crude prices.

There will be lots of important result announcements too, to keep the markets buzzing.  Bajaj Corp, Bank of Maharashtra, Berger Paints, ICRA, Power Finance, Punj Lloyd, Siemens, Sun TV Network and Suzlon Energy will be among the many to announce their numbers today.

The US markets surged on Thursday, coming out of their consolidation mood, on getting some better than expected economic announcements. While, the weekly initial jobless claims fell to a five-year low, the index of US manufacturing activity increased to a two-year high. The Asian markets have mostly got a good start supported by better manufacturing data across the globe and as central banks vowed to maintain stimulus.

Back home, Thursday’s trading session was a big disappointing session of trade for the Indian stock markets as key equity benchmarks snapped the volatile session once again in the negative terrain, extending their losing streak to seventh day. Though, both the frontline gauges re-conquered their crucial 5,800 (Nifty) and 19,500 (Sensex) bastions in initial trade after Prime Minister Manmohan Singh stated that our strategy must not only aim at faster growth but must also ensure that the growth processes are more inclusive. He further stated that there is no reason to be disheartened over the decline in growth rate. But, market failed to sustain the positive momentum as sentiments took a hit after slowdown in factory activity deepened in July as order books shrank by the most in over four years. The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, edged down to 50.1 in July from 50.3 in June. Sentiments also got clobbered out of shape after growth rate of eight core industries slowed down to four-month low of 0.1 percent in June, as against 7.9% in the same month of previous year, mainly due to declining output of crude oil, coal, power and natural gas. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel - have a weightage of 37.9% in the overall Index of Industrial Production (IIP). Rise in inflation for industrial workers too dampened the sentiments. The year-on-year inflation measured by monthly Consumer Price Index-Industrial Workers (CPI-IW) stood at 11.06 per cent for June, 2013 as compared to 10.68 per cent for the previous month and 10.05 per cent during the corresponding month of the previous year. On the global front, most of the Asian equity indices rallied with Chinese markets surging over one and a half percent after the nation’s official manufacturing activity data came in better than expected. Back home, Financial Technologies hogged the limelight with the stock plunging 65% today. The stock was hammered after suspension of all contracts except ‘e-series’ by the National Spot Exchange, in which it has majority stake, raising concerns about liquidity crunch and settlement defaults at the exchange. Finally, the BSE Sensex lost 28.51 points or 0.15% to settle at 19,317.19, while the CNX Nifty declined by 14.15 points or 0.25% to end at 5,727.85.