Market to get a cautious start reacting to weak Q1 GDP numbers

The Indian markets extended their rally mood in last session and added gains of over a percent after rupee staged a sharp pull back.Today, the start of the new week and the month is likely to be a bit cautious as traders will be reacting to the weak first quarter GDP numbers, which came at 4.4% much lower than street expectation. Traders will also be reacting negatively to another economic data, the fiscal deficit of the nation in April-July touched Rs 3.4 lakh crore or 62.8% of the budget estimate. However, the week is likely to be very volatile with lots of macro and other economic data lined up. HSBC India Manufacturing PMI for August 2013 coupled with auto and cement sales numbers will the major events today. There is some positive news for the PSU oil marketing companies, international crude prices have declined considerably after the Syrian concern eased and on domestic front petrol prices has been hiked by a steep Rs 2.35 per litre, the sixth increase in rates in three months and diesel by 50 paise per litre. Meanwhile, there is report that the government is considering various proposals including shutting petrol pumps in the night to taper fuel demand. There will be some jubilation in the pharma sector too, as the Indian pharmaceuticals sector has received FDI of $1 billion during the April-June period this year, the highest among the top 10 segments.

The US markets ended lower in the last session as the traders were still concerned about a possible US strike on Syria, also there were mixed economic reports and chances of the Fed’s stimulus tapering kept looming large. The Asian markets have made a mixed start with some of indices marginally trading in red.

Back home, extending last session’s jubilation, Indian equity benchmarks snapped the immensely volatile session near intraday high on Friday, recapturing their crucial 18,600 (Sensex) and 5,450 (Nifty) bastions. Pullback in last leg of trade mainly proved to be the essence of trade which helped the markets to garner a gain of over a percentage point supported by sharp appreciation in Indian rupee against dollar. Earlier, key Indian bourses traded with traction in morning deals supported by firm global cues. Sentiments also got a boost as Lok Sabha had given its nod to adopt the Land Acquisition Bill. The passage of said bill brought some cheer to select listed real estate companies that are already sitting on huge parcels of land. But, sentiments turned jittery and markets entered into red after the Prime Minister Manmohan Singh said that the rupee’s depreciation is a matter of concern but is part of a needed adjustment due to India’s large current account deficit. Prime Minister said that rupee depreciation will see upward pressure on inflation, but added that RBI will work on containing it. He further said that the government will now have to undertake more difficult reforms, including reduction of subsidy and implementing GST, to put economy back on the path of stable, sustainable growth. Report that the Centre’s fiscal deficit ballooned to almost 63% of Budget Estimates for 2013-14 in just first four months of the year, too aided concern in investors’ mind. The deficit stood at Rs 3.40 lakh crore in April-July period, which was 62.8% of Rs 5.42 lakh crore pegged in the Budget. Weakness in European counterparts dampened sentiments to some extent. Back home, sentiments turned jovial as Indian rupee staged sharp pullback. The Indian rupee appreciated near to 66 per dollar mark at the time of equity markets closing. Buying in software space too aided the sentiments as stocks like, Wipro, TCS and HCL Technologies edged higher on positive economic data in the US. Moreover, shares of two wheeler makers rose on expectations of pickup in sales during the upcoming festive season and on hopes good rains this year will boost rural sales. Meanwhile, traders awaited the first quarter GDP numbers to be announced after the market hours. Finally, the BSE Sensex surged 218.68 points or 1.19% to settle at 18,619.72, while the CNX Nifty climbed by 62.75 points or 1.16% to end at 5,471.80.