Markets to see some recovery with a positive start

The Indian markets suffered in last session mainly due to the global uncertainty and traders took opportunity to take off their money from table, expecting any major fall in a spill-over effect of US development. Today, the start is likely to be flat but positive as indicated by the regional peers. Though, the traders will be cautiously reacting to the current account deficit (CAD) numbers announced late last evening, India's CAD in first quarter FY14 was narrower than expected at $21.8 billion or 4.9 percent of gross domestic product, however it was comparatively higher than 3.6 percent of GDP in the previous quarter ended March 2013. Traders will also be rejoicing the report of Core Sector, the eight key infrastructure industries, which grew at their fastest pace in seven months at 3.7% in August compared with an expansion of 3.1% in the previous month, boosted by robust performance in electricity, cement, steel and petroleum refinery products. There will be another boost to the markets, the Reserve Bank has decided to conduct open market operations (OMOs) by purchasing government securities for an aggregate amount of Rs 10,000 crore on October 7. There will be some buzz in TV and media stocks, as the implementation of the 10+2-minute cap on advertisements kicks in today. PSU oil marketing companies will also be in action after increasing the prices of diesel and LPG cylinders, while reducing that of petrol.

The US markets closed lower on Monday despite some upbeat manufacturing data, on concern of a budgetary impasse in Washington that threatened to partially shut down the federal government beginning Tuesday. The Asian markets have made mostly a positive start and the Japanese market was trading up by over a percent on hopes that US Congress can reach a last-minute deal and pass a stopgap budget measure to beat a midnight deadline.

Back home, Monday turned out to be another murky trading session for the Indian equity indices which got pounded by over one and a half percentage points. 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 19,400 (Sensex) and 5,750 (Nifty) as investors remained sidelines ahead of current account deficit (CAD) data to be released by Reserve Bank of India (RBI) later in the day, which may have widened to 4 percent of GDP in the first quarter due to a surge in gold imports and a deteriorated trade gap. After a gap-down opening, the domestic bourses never looked in recovery mood and continued sliding till end. Selling was both brutal and wide-based, as barring software counter, none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include capital goods, banking, metal, realty and public sector undertakings. Sentiments remained somber on RBI’s report that the listed non-financial private companies on an average posted a decline of 10.9 per cent in net profit in the first quarter of the current fiscal. Selling got intensified as European markets made a poor start, as investors remained concerned that an extended period of political uncertainty in the euro zone’s third largest economy i.e. Italy would delay much needed reforms and reignite the region’s debt crisis. Back home, the rupee remained weak through the day, tailing global risk-off sentiment on a potential shutdown of the US government. The rupee was trading at Rs 62.63 at the time of equity markets closing as compared with Friday’s close of Rs 62.51 per dollar. Meanwhile, realty stocks extended previous session’s losses triggered by RBI’s governor Raghuram Rajan’s comments that the RBI is still worried about high inflation, even when taking out volatile food prices. Additionally, metal stocks like Tata Steel, NMDC, SAIL, Hindalco, JSW Steel etc. edged lower after a weak Chinese data. Finally, the BSE Sensex lost 347.50 points or 1.76%, to settle at 19379.77 while the CNX Nifty plunged 97.90 points or 1.68% to settle at 5,735.30.