Markets likely to make a weak start of F&O expiry week

The Indian markets despite showing some resilience lost about half a percent in last session, though some sectoral indices managed to end in green but the pressure continued on the rate sensitives’. Today, the start is likely to remain somber as the global cues are not supportive. Volatility too cannot be denied with the start of the F&O expiry week of November series. Meanwhile, Planning Commission deputy chairman Montek Singh Ahluwalia has said that Spiralling inflation has harmed the government's credibility while, conceding that they went wrong in projecting moderation in inflation which remains above the double digit mark. Manufacturing sector too is likely to remain under pressure as manufacturing growth slowed in the first six months of this financial year and India Inc expects further moderation in the third quarter. A CII-Ascon survey has indicated that the number of sectors recording excellent and high growth are expected to decline and shift to the moderate growth category in October-December of 2011-12. However, there will be lots of scrip specific action to keep the markets buzzing, Kingfisher Airlines is in talks with a potential investor and is meeting with lenders in a scramble to shore up its finances. While, the Directorate General of Hydrocarbon has given a clean chit to Reliance Industries' capital expenditure of $2.5 billion spent up to 2007-08 in developing the KG-D6 gas fields.

The US markets made a mixed closing on the last trading day of the week; good economic reports were overshadowed by the worsening bond yield situation in the euro zone and investors opted to remain on sidelines till the picture gets clear. The Asian markets have once again made a weak start and some of the indices are trading with gains of 1-2 percent on concern that a US congressional committee will fail to agree on ways to cut the nation’s indebtedness and lingering European debt crisis.

Back home, Indian equity markets finally showed some resilience on the last trading day of the week but failed to negotiate a positive close for the benchmark indices which extended the southward journey for the seventh straight session. Some recovery in sentiments was evident in the dying hours of the day when investors chose to cover the hefty short positions in the heavyweight stocks including Reliance Industries, ONGC etc that got build in the recent sell-off. However, mounting worries over the exacerbating Euro-zone debt trouble would bite into global economic growth dampened investors’ morale, while fears that the euro currency union could be heading towards an ugly breakup too dissuaded marketmen from piling fresh positions. Also the difference of opinion between France and Germany over the role of the European Central Bank continued to weigh on sentiments as France favored stronger action from the ECB while Germany continues to reject calls for the bank to print money and buy bonds on a bigger scale. Back home, concerns over the worsening domestic macro economic situation in the last two months surfaced as the nation’s economy showed signs of slowing down amid the rampant inflationary pressure and rising borrowing costs. Earlier on Dalal Street, the benchmark got off to a sedate opening since sentiments remained weak following the pessimism prevailing in Asian markets. Thereafter, the bourses treaded on a southbound journey and kept declining through the morning trades. There was some recovery seen in the markets after the frontline indices hit the lowest levels in early afternoon trades but profit booking at higher levels pulled them back around the day’s lows.  However, some short covering in the last leg of trade helped the benchmarks in paring most of intraday losses and settle only with marginal cuts. On the BSE sectoral space, the high beta Realty index remained the top laggard in the space with over one and half a percent losses. The defensive FMCG and Metal pockets too went home with cuts of over a percent. On the flipside, the defensive Healthcare sector along with Consumer Durables and Oil & Gas counters settled with marginal gains. Finally, the BSE Sensex lost 90.20 points or 0.55% to settle at 16,371.51, while the S&P CNX Nifty declined by 28.95 points or 0.59% to close 4,905.80.