Markets to get a positive start, energized after a day of break

The Indian markets after a day of gap is likely to make a flat-to-positive start taking cues from the Asian counterparts, though there will be cautiousness related to the prolonging US shutdown, as industry bodies have started raising their concern that it is bound to hit Indian exports because of crippling of the trade facilities at the ports and airports. Also, the Asian Development Bank (ADB) has lowered India’s growth projection for 2013-14 to 4.7 percent from 6 percent earlier, saying the recent rupee depreciation and capital outflows could adversely impact the country's economy. Though, the Finance Minister P Chidambaram has expressed his confidence of closing the fiscal with a better set of numbers than initially projected. There will big disappointment in the telecom sector, as an internal panel of Department of Telecommunications has questioned the sharp reduction in reserve price of spectrum of up to 62 percent by telecom regulator Trai. In a report to the Telecom Commission, the DoT committee admits spectrum trading finds place in the National Telecom Policy (2012) but doubts if this is the time to effect this. The auto companies too will be reacting to their monthly sales numbers.

The US markets despite a good come back, could not manage to end in green on Wednesday as the ongoing government shutdown kept weighing the sentiments and traders remained concerned about the economic impact of a prolonged government shutdown. The Asian markets have started mostly in green, unperturbed by the US development, hoping for an end to the budget impasse soon.

Back home, snapping two days losing streak, Indian equity benchmarks ended the session in the positive terrain with frontline gauges recapturing their crucial 5,750 (Nifty) and 19,500 (Sensex) bastions. Key indices opened on a cautious note after India’s CAD in first quarter FY14 was reported at 4.9 percent, comparatively higher than 3.6 percent of GDP registered in the previous quarter ended March 2013, however it was narrower than expected at $21.8 billion. But sentiments turned upbeat from report that Core Sector, the eight key infrastructure industries, 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. Sentiments also got some support after 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. Some support also came in after European markets opened mostly in the green terrain. Moreover, rally in Asian counters too supported the domestic sentiments. Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was at 62.38 per dollar at the time of equity markets closing, as against yesterday’s close of 62.62 on the Interbank Foreign Exchange. Sentiments also remained upbeat as buying accelerated in Auto space after companies like Maruti Suzuki and TVS Motor reported better than expected September sales numbers. Some support also came in from Economic Affairs Secretary Arvind Mayaram’s statement that the economy will grow at more than 5% in the current financial year ending in March 2014. He also said that India will finance its current account deficit fully in the fiscal year ending March without drawing down on its reserves, and will also contain the fiscal deficit at 4.8% of GDP. However, gains remained capped to some extent, as Indian manufacturing activity shrank for a second consecutive month in September mainly on account of decline in new orders. The HSBC Purchasing Managers’ Index (PMI) stood at 49.6 points in the month of September, marginally up from 48.5 points in August, indicating moderate contraction in the sector, as a reading above 50 indicates growth and below that depicts contraction. Meanwhile, shares of public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC declined after petrol prices reduced by Rs 3.05 per litre, while there was no one time hike in diesel. Finally, the BSE Sensex surged 137.38 points or 0.71%, to settle at 19517.15, while the CNX Nifty gained 44.75 points or 0.78% to settle at 5,780.05. The Indian markets remained shut on Wednesday on account of a public holiday.