Markets to start the new series on a cautious but positive note

The Indian markets snapped the F&O series on a very quiet note, though the September series witnessed gains of over 8 percent for the benchmarks and the rollovers indicated a bullish trend for the coming series, but today the start of the new series is likely to be cautious and markets may remain in consolidation mood. Traders will be eyeing the movement of rupee, which is on an appreciation move, outperforming all its regional peers after RBI took additional measures for liquidity. However, there will be some concern in the rate sensitive’s as the RBI governor Raghuram Rajan has questioned central banks across the globe, whether current ultra-low interest rates are the right way to return to growth after the financial crisis, sending jitters back home. Meanwhile, global credit rating agency Moody's has said that uncomfortably high inflation coupled with supply constraints is impacting India’s growth that has slowed to 4.4 percent in the April-June quarter this year. The oil and gas sector is likely to remain buzzing, as the government has extended by one month the time given to a panel headed by Kirit S Parikh to suggest a methodology for pricing of diesel and cooking fuel.   On the other hand the oil minister M Veerappa Moily has said that new gas pricing policy will apply uniformly to all. There will be some cheer in the power sector, as the Power Minister Jyotiraditya Scindia has said that he will soon seek the Cabinet nod for capping the price of gas for the power sector at $5 per mmBtu.

The US markets despite a good going in early trades, could just manage to snap the session with modest gains, sentiments were impacted by report from the National Association of Realtors showing a bigger than expected drop in pending home sales in the month of August. Most of the Asian markets have made a positive start, set for best monthly gains since September 2010, however the Japanese market was slightly in red as the yen strengthened against the dollar, though its inflation accelerated to the fastest pace since 2008 in August.

Back home, the September series futures and options contract expiry day turned out to be a lackluster session for the benchmark indices, as the session lacked the flavor of high volatility, which typically surfaces on F&O settlement day. During the session, the frontline equity indices traded in an extremely tight range hardly budging from the psychological 5,900 (Nifty) and 20,000 (Sensex) levels. Nevertheless, markets traded in the green terrain for most part of the day’s trade, as sentiments got some boost from Reserve Bank of India’s (RBI) assurance that it would provide liquidity to the market and can also undertake open market operations if required. RBI relaxed the minimum maturity tenure for banks’ foreign currency borrowings’ to one year from three years, in order to use the central bank's swap facility which was set up to support the ailing rupee. Sentiments also remained up-beat on report that indirect tax collections grew at 4.1 percent in the April-August period of this fiscal total collection of indirect taxes stood at about Rs 1,67,000 crore during the first five months of the 2012-13 fiscal. Appreciation in Indian rupee too aided the sentiments. However, the gains on the upside remained capped as global cues remained sluggish, while the Asian markets too shut shop mostly in the red with lingering concerns in US about the possibility of a government shutdown at the end of the month. Moreover, European markets too turned negative after a positive start. Back home, sentiments also remained dampened as oil and gas sector declined over a percentage point led by Reliance Industries (RIL) despite Oil Minister M Veerappa Moily said that his ministry has not moved the Cabinet for appointing a consultant to study the reasons for falling gas output at the KG-D6 block operated by Reliance. Moreover, stocks related to consumer durables segment too declined after RBI banned zero percent interest rate scheme offered by the banks for purchase of consumer goods. Finally, the BSE Sensex gained by 37.61 points or 0.19%, to settle at 19893.85 while the CNX Nifty added by 8.40 points or 0.14% to settle at 5,882.25.