Markets likely to get a flat-to-cautious start of the new series

The Indian markets showed a big bounce back in last session with benchmarks climbing over one and half a percent mainly due to the short covering on account of August F&O series. Though, the series was a dismal one with major indices losing around 8 percent but they managed to cut their losses in last two days. Today, the start is likely to be flat-to-cautious, as the global cues are mixed, though there will be some respite as well from the geo-political front with the UK parliament voting against military strikes on Syria. The big beneficiaries of the development are likely to be the battering oil marketing companies, as international oil price fell after the decision. However, on the domestic front, finally the Prime Minister Manmohan Singh conceded in Parliament that the country was going through a difficult situation and had to reckon with the uncertainties created by global factors. Traders will also be eyeing the first quarter GDP numbers to be announced after the market hours. There is wide consensus that GDP will grow 4.7-4.8% in June quarter, showing India's economy slowing to dangerously low levels. There will be some buzz in the banking sector too, as the finance minister P. Chidambaram has said that banks must ensure flow of credit to every sector of industry. He said that bankers have been told to be sympathetic and have humane approach towards genuine defaulters. 

The US markets managed a green close helped by easing concerns about Syria as well as some upbeat economic data. US GDP increased by 2.5 percent in the second quarter, while the weekly jobless claims dropped, though trade remained cautious with looming fed tapering decision. The Asian markets have mostly made a positive start, however some of the indices are trading in red too with Japanese market taking the lead after data showed consumer prices in the nation rose at the fastest pace since 2008.

Back home, August series futures and options expiry session turned out to be a splendid one for the domestic frontline indices, as they staged a superb performance throughout the day to end near intraday high, recapturing the psychological 5,400 (Nifty) and 18,400 (Sensex) bastions. Sentiments remained up-beat since beginning after key bourses opened with a huge gap on upside, supported by appreciation in Indian rupee against dollar. Benchmarks also got some strength after government turned down fears of any sharp spike in fiscal deficit this year because of the food security programme that will be implemented once the legislation is through in Parliament. Strength to the bourses also came in on back of buying witnessed in oil marketing companies (OMCs) viz. BPCL, HPCL and IOC after the central bank opened a special window to sell dollars to meet the daily dollar requirements of the three public sector oil companies. Supportive cues from US markets too provided the much needed support to local markets, as they ended higher with modest gains overnight, mainly on the back of bargain hunting at lower levels and optimism of delay in Fed’s tapering after the report of a bigger than expected drop in pending home sales in July. Back home, the rupee traded at Rs 67.32 per dollar at the time of equity markets closing as against previous close of 68.80 per dollar after the Reserve Bank of India announced measures late Wednesday to curb rupee fall through dollar flows. Markets continued its bull run despite some concern, as the global rating agency Standard and Poor's has cautioned that large deficit economies including India could face more economic problems in the near term. The August series however remained dismal with Nifty showing rollover of around 45% and ended lower by 8.4%, while BSE Sensex snapped the series down by 7%. On the broader front CNX Midcap lost 9% and BSE Small cap was down by 7%. Sectorally, Bank nifty and BSE Cap Goods were down by 16% each, while BSE FMCG index ended lower by 14% for the series. However, for the series BSE Metal index was up by 10% and BSE IT gained 9%. For the day, the BSE Sensex surged 404.89 points or 2.25% to settle at 18,401.04, while the CNX Nifty climbed by 124.05 points or 2.35% to end at 5,409.05.