Markets to get a cautious start tailing global peers

The Indian markets moved higher in last session supported by some government optimism and the strength in rupee against dollar. Today, the start may be in flat-to-green but the traders will remain cautious with the global political scenario. The rupee, which moved to seven weeks high, is likely to keep the spirit upbeat with further strength. However, traders will also be eyeing the Services activity with the HSBC Services Purchasing Managers’ Index (PMI), scheduled to be released today. In August the measures fell to 47.6, the lowest since April 2009. There will be some action in the consumer durables, auto and banking sector, as the finance ministry has said that it will provide additional capital to state-run banks, ostensibly to boost lending to sectors such as two-wheelers and consumer durables at lower interest rates. The move by the finance ministry is, aimed at boosting demand in select pockets and putting the economy back on track. There will be some buzz in metals and mining stocks, as the Supreme Court has said that there should be a proper system in place to regulate mining and other related activities in Goa where iron ore extractions in 90 mines had been banned by it following the report of a panel that illegal mining was going on there.

The US markets continued their tepid run on Thursday with the lingering government shutdown and the major indices closed lower by a percent amid disappointing service sector data. Most of the Asian markets have made a soft start on concern that the US political impasse could lead to the government defaulting on its debt, sparking a recession.

Back home, boisterous benchmarks once again showcased an enthusiastic performance on Thursday, by rallying close to two percentage points and breaking lots of psychological levels in their northbound journey on expectations that the US government’s partial shutdown may force Fed to delay tapering of monetary stimulus. Sentiments remained upbeat since beginning, as key bourses opened with a decent gain and there appeared not even an iota of profit booking in the session as the benchmarks fervently gained from strength to strength with investors continued hunt for fundamentally strong stocks. Frontline indices managed to extend their rally for second straight day and settled above their crucial 5,900 (Nifty) and 19,900 (Sensex) levels. Sentiments got bolstered after Indian rupee appreciated against the dollar after the current account deficit (CAD) for April-June quarter was in line with what the Street expected. Investors continued to trade jubilantly through the session despite report that Asian Development Bank (ADB) 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. Some support also came in after Finance Minister P Chidambaram expressed his confidence of closing the fiscal with a better set of numbers than initially projected. Risk appetite also got a boost after a gauge of China’s services industries jumped to six-month high, raising hopes that the world’s second-biggest economy will sustain a rebound after a two-quarter slowdown. Moreover, Asian markets ended mostly in the green. Back home, buying in metal and mining stocks too supported the sentiments. Stocks like NMDC, Tata Steel, Jindal Steel & Power, Hindalco, SAIL, JSW Steel, Hindustan Zinc etc. edged higher after encouraging data from China, the world’s largest consumer of copper and aluminium. Stocks related to automobile sector too remained on the buyers’ radar after most of the companies reported a slightly better-than-expected sales numbers for the month of September 2013 and on further expectations of better monsoons reviving growth during the festival season. Additionally, shares of cement makers also remained in demand on hopes that the cement prices are likely to go up further in the post-monsoon quarters and on the back of a festive season. Finally, the BSE Sensex surged 384.92 points or 1.97%, to settle at 19902.07, while the CNX Nifty gained 129.65 points or 2.24% to settle at 5,909.70.