Markets to get a good start on US development and better earnings

The Indian markets remained shut on Wednesday gearing for the big move after witnessing a modest loss in last session. Today, the start is likely to be a gap-up one tailing the upsurge in the global markets and some better than expected earnings announcement. Traders will also be taking cues from the Reserve Bank of India’s governor Raghuram Rajan’s statement that India’s economy will pick up by year-end mainly due to the start-up of billions of dollars worth of stalled resource projects and a good monsoon season that will bolster agricultural production. Also, as the Planning Commission has estimated that the current account deficit for 2013-14 will be around 2.5 percent of GDP, much lower than Finance Minister P. Chidambaram’s target of 3.7 percent of GDP. However, there will be some concern too, with the World Bank slashing India’s economic growth forecast for the current financial year to 4.7 percent from an earlier projection of 6.1 percent. There will be some buzz in the steel sector on report that steel consumption in the first six months of the current fiscal remained flat, up by just 0.8 percent year-on-year due to poor offtake by construction and automobile sectors.

There will be some important result announcements too, to keep the markets buzzing. Axis Bank, D B Corp, HCL Tech and South Indian Bank will be coming up with their numbers.

The US markets surged on Wednesday after the Senate reached an agreement to increase the debt limit and end the 16-day government shutdown. Traders even shrugged off a report showing an unexpected drop in homebuilder confidence. Asian markets have made an all green start, taking cues from the US development. Chinese market was a bit cautious ahead of some important economic data tomorrow.

Back home, Indian equity benchmarks ended the volatile day of trade in red on Tuesday, snapping five sessions winning streak, as sentiments were weighed down by selling in banking stocks amid higher retail inflation data. Earlier markets made a positive opening supported by better-than-expected Reliance Industries’ Q2 numbers. RIL reported a 14% growth in revenues to Rs 106,523 crore in the July-September quarter and posted a marginal 1.5% increase in net profit to Rs 5,490 crore. Most importantly, it became the first private sector firm to report revenues exceeding Rs 1 lakh crore in a quarter. Some support also came in from the Planning Commission Deputy Chairman, Montek Singh Ahluwalia’s statement that inflation will soften in coming months, as the steps taken by government to destock the excess food stocks would result in cooling-off of prices in few weeks ahead. However, markets took a U-turn and entered into negative terrain as investors remained concerned about the macro numbers, as retail inflation gauged by CPI, reversed its declining trend to hit a near-double-digit mark to 9.84% on-year in September. Sentiments also got dampened after Confederation of Indian Industry (CII) survey showed that Indian economic growth is likely to remain below 5 percent in the current fiscal. Meanwhile, depreciation in rupee too hurt investors’ confidence. Benchmarks witnessed decent recovery paring all their losses supported by firm opening in European counters buoyed by hopes that US politicians were close to resolving the ongoing fiscal deadlock. Back home, the recovery proved short-lived and markets once again entered into the red terrain, dragged by selling in rate sensitive counters after higher-than-expected inflation data dented hopes for a rate cut. Meanwhile, banking space shed over two and half a percent led by selling in HDFC Bank after country’s third-biggest lender posted quarterly profit growth of 27 percent, lower than street estimate, due to losses in its investment portfolio, higher operating expenses and worsening asset quality. It was the first time in a decade that HDFC Bank's net profit has fallen below 30 percent. Finally, the BSE Sensex lost 59.92 points or 0.29%, to settle at 20547.62, while the CNX Nifty declined by 23.65 points or 0.39% to settle at 6,089.05. Indian markets remained closed on Wednesday on account of a public holiday.