Markets to continue with the bear phase lacking any trigger on upside

The Indian markets extended their declining streak with rate sensitive’s suffering on the worries of looming another rate hike by RBI. The weakness in domestic currency too weighed heavily on the sentiments. Today, the start is likely to remain weak as indicated by global cues, there is not much on the domestic front too that can support the markets. However, the Department of Economic Affairs Secretary (DEA) Arvind Mayaram has said that there is no room of fear for rupee tanking again when US Federal Reserve decides on tapering of its stimulus programme, he further stated that Government has enough ammunition in its hands to deal with the situation. Though, there will be some concern as the country’s crude oil import bill jumped 9.5 percent to Rs 3,47,432 crore in the first five months of the current fiscal on account of sharp depreciation of the rupee against the US dollar. There will be some respite, as government on Monday said it will not borrow more than Rs 2.35 lakh crore in the second half of the current fiscal. The cement stocks may come under pressure as the realtors’ body CREDAI citing sudden rise in cement prices in last one week, is mulling approaching CCI alleging cartelisation by cement producers. 

The US markets closed lower on Monday, pulling off from their last week’s high as traders went on to cash in on the recent gains, while concerns about another potential budget crisis in Washington also weighed on the markets. The Asian markets have made mostly a lower start with some of the major indices losing over half a percent, concerned about the debate on the US fiscal position after Senate is considering a measure to cut off funding for Obama’s healthcare law.

Back home, Monday turned out to be another murky trading session for the Indian equity indices which got pounded by around two percentage points on first day of F&O expiry week. Indian barometer gauges, prolonging their southward journey for second consecutive session, witnessed blood bath and closed near their intraday lows, breaching major crucial support levels of 20,000 (Sensex) and 5,900 (Nifty) amid looming fear of another hike in repo rate by the Reserve Bank of India (RBI) to contain inflation and support rupee. After a gap-down opening, the domestic bourses never showed any strength and continued sliding till end. Selling was both brutal and wide-based as, barring few counters viz. consumer durables, software and technology, none of sectoral indices managed even a green close. Counters, which featured in the list of worst performers, were banking, realty and capital goods.  Sentiments remained somber after Fitch Ratings cut its growth forecast for India in 2013-14 to 4.8%, from its earlier estimate of 5.7% made in June and 7% in September. Further, the agency also slashed India's growth rate projection for FY’15 to 5.8% from the June’s forecast of 6.5%, against its projection of 7.5% in September, 2012. Sentiments also got dampened on report that foreign direct investment (FDI) inflows into the services sector, which contribute over 60 percent to India’s GDP, declined by 36.5% year-on-year to $1.02 billion during the April-July period. Selling got intensified as European markets made a poor start, as investors remained on sidelines ahead of monetary policy developments in the US. Back home, the rupee remained weak through the day due to month-end dollar demand from importers. Selling in PSU oil marketing companies viz BPCL, HPCL and IOC too dampened the sentiments with no diesel price hike in sight. Additionally, sugar space too remained buzzing with UP based sugar companies suffering with a cut of around 1-3.5%, lobbying for an immediate review on current cane pricing and introduction of the revenue sharing model as per the Rangarajan committee recommendations. Bucking the trend, shares of some jewellery makers came in limelight and traded higher on hopes of strong demand ahead of festival season. Finally, the BSE Sensex plunged by 362.75 points or 1.79%, to settle at 19900.96, while the CNX Nifty declined by 122.35 points or 2.04% to settle at 5,889.75.