Markets to get another weak start on feeble global cues

The Indian markets were massacred in last session on concern of fiscal deficit after government approved the Food Security Bill. The rupee too plunged to its new lifetime low breaching 66/$ mark and raised fear of rating downgrades. Today, the start is likely to remain weak with no support in sight amid the global gloom. The geo-political tension will keep weighing on the sentiments of the domestic investors too. Meanwhile, the Finance Minister P Chidambaram has said that the currency is undervalued and the government will endeavor to improve investor sentiment to help it find its appropriate level. Chidambaram has also said that the implementation of the Food Security Bill will not impact the fiscal deficit, which the government is committed to contain at 4.8 percent of the GDP. Though, the trade is likely to remain volatile on the penultimate day of the F&O expiry and markets may see some short covering as well.  There will be some buzz in the banking sector as the Reserve Bank of India has proposed a 'continuous authorisation' policy for new private banks and dilution of the government's stake below the 51 per cent in public sector banks to reduce the fiscal burden. The PSU oil marketing companies too are likely to be under pressure as the international crude prices have surged on escalating geo-political tension. Though, there is buzz that diesel prices may be increased by at least Rs 3 a litre after the monsoon session of Parliament ends next week.

The US markets suffered sharp plunge in last session on concern about the latest developments regarding the situation in Syria after Defense Secretary Chuck Hagel reportedly told that American forces are “ready” to launch strikes on Syria if President Barack Obama chooses to order an attack. Asian markets have made an all red start on concern the US will take military action against Syria.

Back home, Tuesday turned out to be a big disappointing session of trade for the stock markets in India, as the benchmark equity indices clobbered out of shape and settled the session at their lowest level since January 2012 with a cut of over three percentage points. Both the frontline gauges tumbled below their crucial 5,300 (Nifty) and 18,000 (Sensex) levels as sentiments got spooked largely by the sharp fall in the rupee, which is the worst performing currency in Asia. The rupee fell to a record low and looked poised for further losses, with a series of measures unveiled last week failing to stall its decline. Sentiments got hammered on concerns related to current account deficit (CAD), as Lok Sabha passed the Food Security Bill after considering all the amendments. The bill proposes subsidized food-grain for up to 75 percent of the rural and up to 50 percent of the urban population. Global cues too remained sluggish as sentiments remained jittery over the geo-political tensions coupled with uncertainty over the timeline for tapering of US Fed stimulus. European counterparts traded choppy in the early deals. Back home, banking shares remained under pressure on the bourses after the rupee once again weakened against the dollar due to month-end demand from importers. Investors’ also remained worried about the slow pace of economic reforms in India, which made it harder for the country to finance its hefty current account shortfall. Meanwhile, global ratings agency Fitch has warned India of a rating downgrade if the country is unable to meet its fiscal deficit target adding that India's fiscal numbers look weak and the space to contain expenditure is very limited in the second half of the financial year. Sentiments also remained dampened after share prices of three public sector oil marketing companies BPCL, HPCL and IOC plunged as tensions in Syria pushed crude prices higher. Finally, the BSE Sensex shaved off 590.05 points or 3.18% to settle at 17,968.08, while the CNX Nifty plunged by 189.05 points or 3.45% to end at 5,287.45.