Markets to get a cautious start on sluggish global cues

The Indian markets were butchered in last session after the rupee slumped to its all time low, though the RBI intervention came to its rescue and it snapped the highly volatile session on a slightly stronger note. Today, the start is likely to remain somber as the global cues are soft, though some recovery can be expected in late trade; traders will again be watching the rupee movement on the domestic front, as the good trade deficit data in US has once again raised the concern of US Fed phasing out its $85 billion a month stimulus. Meanwhile, the Reserve Bank Governor designate Raghuram Rajan has said that there is no magic wand to pull the country instantly out of challenges being faced by the economy. There will be action in the IT pack after the global IT major Cognizant, beating street expectations and surpassing its own guidance reported a profit of $300 million for the June quarter, up 5.7% sequentially and 19.2% compared to the year-ago quarter. The revenues stood at $2.16 billion, up 7% quarter-on-quarter and 20.4% compared to the same quarter a year ago.

There will be lots of important result announcements too, to keep the markets buzzing. Aban Offshore, Apollo Hospitals, Apollo Tyres, Cadila Health, Dhampur Sugar, Glaxosmithkl Pharma, Lanco Infra, Lupin, MOIL, NMDC, Ranbaxy Lab, Tata Motors and Welspun India are among the major to announce their numbers.

The US markets ended lower on Tuesday on renewed concern about the outlook for the Federal Reserve's stimulus program after the trade deficit narrowed by much more than expected in the month of June. The Asian markets have made mostly a lower start led by the Japanese market which slid on strength of yen as it surged to its six weeks high against dollar.

Back home, Tuesday’s session turned out to be a day of rigorous pounding for Indian stock markets which seldom showed any instances of gaining impetus. The benchmark equity indices suffered a nasty two and half a percent laceration and drifted even below the psychological 18,750 (Sensex) and 5,550 (Nifty) tracking slump in the Indian rupee which hit record low against the dollar today. A gap-down start of markets never turned into recovery mood and continued sliding till end, closing not only to the lowest point of the day but also near their lowest level in almost eight weeks. Selling was both brutal and wide-based as none of the sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include Consumer Durables, Banking and Metal. Sentiments remained dampened after the Asia-focused brokerage CLSA downgraded the growth forecast for the current fiscal year ending in March 2014 to 5.2% from 5.5% on recent RBI policy initiative. More anxiety came in from its forecast that India’s growth will be sub-6% for three straight years. Selling got intensified tracking selling in banking counter on concerns that the Reserve Bank of India (RBI) would announce fresh measures to cap liquidity in an effort to prevent further weakness in the rupee. Meanwhile, sentiments across the globe remained down-beat on speculation that the Federal Reserve may soon reduce economic stimulus after US economy showed signs of recovery. Back home, sentiments also got clobbered out of shape as selling was witnessed in NBFC related stocks on reports that the granting of new banking licences may take a bit long as the central bank is deeply examining the corporate groups. Sentiments also got hurt after textile related stocks like, Alok Industries, Grasim Industries and Arvind edged lower as the India’s export of textiles and clothing remained almost the same year-on-year, in the first three months of the fiscal to $7.79 billion compared to $7.76 billion in last fiscal. Additionally, sentiments also got impacted after Financial Technologies stock once again tumbled around 20% after trading in e-series product contracts were halted at National Spot Exchange (NSEL), the only contracts available on the exchange platform, as a precautionary measure. Finally, the BSE Sensex shaved off 449.22 points or 2.34% to settle at 18,733.04, while the CNX Nifty plunged by 143.15 points or 2.52% to end at 5,542.25.