Markets likely to get a flat-to-positive start

The Indian markets kept their spirit high in last session, adding gains of about a percent on good trade data. Though, there were mixed economic reports after market hours, whose impact can be seen today. Markets are likely to make a mildly positive start tailing the regional peers, however there will be some cautiousness too, especially in the capital goods sector after the Industrial Production data came at dismal -2.2 percent, though there was a positive news, retail inflation eased to 9.64% in July from 9.87% in the month of June. Traders will also be eyeing the movement of rupee which despite all effort by government and the RBI continued its fall. Finance minister P Chidambaram last day announced various measures including, a planned increase in the import duty on several red-hot imports like gold and silver, allow three public sector financial institutions to raise dollar funds through bonds, make NRI deposits more attractive and ease foreign loan norms to attract foreign investment and plug the wide current account deficit (CAD), but all these announcements fell short of Street expectations. There will be some buzz in the pharma sector, as the Finance Minister has said that the government will soon finalise the foreign investment policy on brownfield pharmaceutical projects.

There will be some important result announcements too, to keep the markets buzzing. Aditya Birla Chemicals, Alok Inds, BPCL, DCM, Educomp Sol, Escorts, Future Ventures, GMR Infra, Hindalco Inds, Hotel Leela, Indian Oil Corp, Mahindra & Mahindra, OIL India will be among the many to announce their numbers today.

The US markets once again made a mixed closing to start the new week, the trade remained choppy on concern about the outlook for the Federal Reserve's stimulus program. Most of the Asian markets have made a positive start, supported by gains in Japanese shares after the yen weakened, as report showed machinery orders beat estimates and buzz of Prime Minister Shinzo Abe considering a corporate-tax cut.

Back home, extending last session’s northward journey, Indian equity benchmarks ended Monday’s session on a firm note with key bourses garnering gains of around a percentage point. After initial volatility, markets traded firmly as sentiments remained buoyed after the central bank announced more measures to support the domestic currency. The Reserve Bank of India (RBI) on August 8, 2013 announced that it will sell government bonds worth Rs 22,000 crore every Monday to check volatility in the forex market. Sentiments also got boosted after India’s exports surged 11.64% at $25.83 billion in July 2013 against $23.14 billion in the same month of the previous year, while imports during July, 2013 were down 6.20% to $38.10 billion from $40.62 billion in the same period last year, pulled down by inbound shipments of gold.  However, investors cashed out some gains in late trade, ahead of the industrial output data scheduled later in the day. Street expects the industrial production to remain subdued in June which would drag down factory output growth in the first quarter of the current financial year. But, reassurance from Finance Minister P Chidambaram that India’s Current Account Deficit being contained at 3.7% of GDP, helped frontline gauges to end above their crucial 5,600 (Nifty) and 18,900 (Sensex) levels. Asian markets too provided support to the domestic markets with most of the regional peers ending in the green terrain. Back home, benchmarks continued to trade higher in noon deals supported by buying in metal and mining stocks amid hopes that Beijing would step in to support the economy. Steel major Tata Steel spurted ahead of its Q1 results on August 13, 2013. Bucking the trend, stocks related to banking segment ended mostly lower after the RBI’s fresh steps to drain cash from the banking system. Some pressure also came in after State Bank of India (SBI), on the consolidated basis, registered 11.82% fall in its net profit after taxes and minority interest at Rs 4298.56 crore for the quarter as compared to Rs 4874.70 crore for the same quarter in the previous year. Meanwhile, gross non-performing assets (NPAs) increased to 5.56% in the April-June quarter as against 4.99% in the same quarter previous year while, net NPAs surged to 2.83%. Finally, the BSE Sensex gained 157.64 points or 0.84% to settle at 18946.98, while the CNX Nifty rose by 46.75 points or 0.84% to end at 5,612.40.