Markets to get a cautious start of the penultimate day of F&O expiry

The Indian markets managed a flat but positive closing in last session after declining in last two sessions. Trade remained impacted due to decline in rate sensitives’ and was also weighed down by the weakness in rupee. Today, the start of the penultimate day of the F&O expiry is likely to remain cautious, though volatility may emerge in the latter part of the day. Markets will be getting some support with Union Cabinet approving the methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding for the first time.  Also, RBI in its latest initiative of relaxing norms to raise funds from abroad has said that now all types of companies can avail trade credit facility from overseas for import of capital goods. Earlier, only companies in the infrastructure sector were allowed to raise such trade credits. There will be buzz in the oil and gas sector too, as the Cabinet Committee on Economic Affairs (CCEA) approved the long-awaited shale gas and oil exploration programme to boost domestic output. However, the PSU oil marketing companies will be in somber mood, as the oil minister M Veerappa Moily has said that there was no proposal to hike diesel and cooking gas rates just yet. Though, the final meeting of the Kirit Parekh panel is likely to take place today and it may recommend an export parity pricing (EPP) plus coastal tariff and central sales tax (CST) for diesel.

The US markets once again ended mostly in red despite some late hour pullback, the economic reports were weak as the consumer confidence dropped, while the renewed uncertainty about the outlook for the Fed’s asset purchase program also weighed on the sentiments. The Asian markets have made a mixed start, the Japanese market was leading the decliners pack as the drop in US consumer confidence has rattled already frayed nerves.

Back home, Indian equity indices, snapping two-day losing streak, ended the volatile day of trade slightly in the positive terrain on Tuesday, as investors opted beaten down but fundamentally strong stocks. Earlier, markets opened in the red as sentiments remained down-beat on report that 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. Benchmarks soon made a recovery and entered into positive trajectory as sentiments turned sanguine after the Department of Economic Affairs Secretary (DEA) Arvind Mayaram 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. Some support also came in as government on Monday said it will not borrow more than Rs 2.35 lakh crore in the second half of the current fiscal. However, gains on the up-side remained capped as the mood remained jittery on concerns that the Reserve Bank of India (RBI) might increase interest rates again in the near future to rein in persistently high inflation. Meanwhile, foreign institutional investors (FIIs) sold shares worth a net Rs 80.57 crore on September 23, 2013. Sentiments also remained dampened after global rating agency Moody’s revised its forecast, on the Indian economic growth, lower to 4.5 percent for 2013-14 from 5.5 percent projected earlier, on account of deteriorating macro-economic indicators of the country.  Global markets too traded choppy with most of the Asian equity benchmarks ending lower in the red as investors remained concerned about the debate on the US fiscal position as the Senate is considering a measure to cut off funding for Obama’s healthcare law. Though, the domestic markets got some support from European markets, which traded in the green in early deals ahead of the reports on German business confidence and US home prices. Back home, the rupee that made a weak start too supported the sentiments paring most of its losses and traded flat at the time of equity markets on the back of dollar sale by custodian. Stocks related to auto sector remained on the buyers’ radar on expectations of higher demand during the upcoming festive season. On the flip side, banking counter traded under  pressure through day’s trade after Moody’s downgraded its outlook on the PSU major State Bank of India’s (SBI) financial strength rating to ‘negative’ from ‘stable’. Earlier, Fitch had downgraded some ratings of Indian Bank, Punjab National Bank and Bank of Baroda on expectations of a further deterioration in asset quality. Finally, the BSE Sensex gained by 19.25 points or 0.10%, to settle at 19920.21, while the CNX Nifty added by 2.70 points or 0.05% to settle at 5,892.45.