Markets to get a flat-to-soft start on sluggish global cues

The Indian markets surged in last session as Infosys started the earnings season with a bang, increasing its annual revenue guidance. Today, the start is likely to be flat-to-cautious tailing the sluggishness in the global markets. There will be some hangover of lower than expected IIP numbers of August, which was announced late Friday and came at a meagre 0.6% versus a robust 2.8% in July. Meanwhile, there will be some support to the markets with Finance Minister P Chidambaram, questioning IMF’s low growth projection of 3.8 percent for India for the current fiscal has said that the government will not hesitate to take difficult decisions to contain fiscal and current account deficits. There will be buzz in the banking sector, as the Reserve Bank of India Governor Dr Raghuram Rajan has said that India will soon come out with major reforms in the banking sector that will allow foreign banks to enter India in a big way and even take over domestic lenders. SEZ related stocks will see some upmove with the Commerce Ministry’s plan to seek concessional tax structure for SEZ units. Also, traders will be eagerly eyeing the Inflation numbers of WPI and CPI to be announced later in the day. There will be buzz on earnings front too, with some important result announcements during the day and the Reliance Industries numbers slated after market hours.

The US markets continued their northbound journey on Friday with major indices adding over half a percent on signs of progress toward resolving the fiscal crisis. The Asian markets have made a mixed start and the major indices are trading cautiously as the US lawmakers were unable to reach an accord to raise the US debt limit and restore government operations. Chinese market was marginally in green despite the exports unexpectedly falling in September and inflation jumping on food prices.

Back home, boisterous benchmarks showcased an enthusiastic performance on Friday, by rallying over a percentage point and breaking many psychological levels in their northbound journey. Bourses traded fervently throughout the session gaining strength to strength, as investors continued hunt for fundamentally strong but oversold stocks. Frontline indices managed to extend their rally for fourth straight day with Sensex settling above its crucial 20,500 mark, while Nifty ended near its psychological 6,100 bastion as investors went for hefty across the board buying. Sentiments remained up-beat since morning after the information technology (IT) major Infosys revised its FY14 revenue guidance to 9-10% from 6-10% in dollar terms. Meanwhile, Infosys, on the consolidated basis, registered a growth of 1.60% in net profit at Rs 2407 crore as compared to Rs 2369 crore in the same quarter previous year. Total income of the company rose 27.56% to Rs 13475 crore for quarter under review as against Rs 10564 crore in corresponding quarter previous year. Some strength also came in after Reserve Bank of India governor Raghuram Rajan said that Indian companies with high foreign currency debt could face difficulties but do not pose system-wide risks to the country's financial sector. Moreover, investors shrugged off report that Ficci has lowered the country’s economic growth forecast for 2013-14 fiscal to 5 percent from 6 percent projected in July. Supportive cues from US markets provided the early leads to local markets, while firm opening in European counterparts too supported the domestic markets. Back home, traders were eyeing the Industrial growth numbers; the Index of Industrial Production (IIP) data for August though will be announced later in the day but is likely to remain on growth path after surprising in last month with a growth of 2.6 percent and coming out of contraction mood. Appreciation in Indian rupee too provided some support to the markets. The Indian rupee was trading near at 61 per dollar at the time of equity markets closing as against previous close of 61.27 per dollar. Meanwhile, stocks related to banking sector edged higher after the Reserve Bank of India allowed banks to raise funds from global multilateral institutions until 30 November 2013, as long as the money raised is for general banking purposes and not for capital enhancement. Finally, the BSE Sensex surged 255.68 points or 1.26%, to settle at 20528.59, while the CNX Nifty gained 75.25 points or 1.25% to settle at 6,096.20.