Markets to get a green start; stablise after last session’s fall

The Indian markets capitulated in last session as traders opted to book profit despite some better than expected earnings announcement. Today, the start is likely to be in green and the local markets may stablise from last session’s fall on global cues. However, there will be some concern too, as the Moody's Analytics despite saying that the economy is nearing the bottom of the current cycle and there is recovery in sight as investment should improve from the fourth quarter, has said that the days of 8 percent growth are “gone” as weak business sentiment will take time to turn around. There will be some buzz in the gold and jewellery related stocks with the government reducing the import tariff value of gold and silver to $418 per 10 gram and $699 per kg, respectively, in line with the global rates of the precious metals. The sugar stocks too are likely to see some action, as the apex body for sugar industry- ISMA has demanded the government to increase import duty on sugar and provide assistance for exports to bail out the sector that suffered losses in 2012-13 season. There is also likely to be some cheer on the street with a study commissioned by market regulator Securities and Exchange Board of India (Sebi) suggesting lowering of securities transaction tax (STT) to boost the capital market.

Apart from that there will be some important result announcements too. CRISIL, L&T, NIIT, Petronet LNG and RPG LifeSciences will be among the many to announce their numbers today.

The US markets extended their gains in last session despite an early fall on profit taking. Traders took cues from the report of decline in initial jobless claims and rise in regional manufacturing activity. The Asian markets have made a mixed start with some of the indices trading marginally in red. Chinese market was down before reporting economic growth data, while the Japanese market was down despite the weakness in yen.

Back home, Thursday turned out to be a disappointing session of trade for the Indian stock markets, as frontline indices ended the session near their intraday low, falling over half a percent. Profit booking in software and technology counters mainly played spoilsport with investors opting to offload stocks like TCS and Infosys after recent gains post encouraging second quarter earnings. Though, markets traded tad above their neutral lines for most part of the day as some support came in 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. Some strength also came in after Planning Commission 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. Adding strength to the bourses, Indian rupee gained sharply on the back of dollar sale by exporters. However, gains on the up-side remained capped as investors remained concerned after the World Bank revised India’s economic growth forecast downwards for the current financial year to 4.7 percent from 6.1 percent projected in April, citing two consecutive months of negative business sentiment and higher interest rates.  Supportive cues from US markets and Asian markets too provided some support to local markets, though disappointing cues from European market took toll on domestic sentiments in late trade and dragged the frontline gauges below the psychological 6,050 (Nifty) and 20,500 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets. Back home, sentiments also got dampened after selling was witnessed in banking counter on report that foreign institutional investors (FIIs) reduced their shareholding in banking stocks during July-September quarter on concerns of margin stress due to slowdown in the economy, rising non-performing assets and higher cost of funds. Bucking the trend, Axis Bank edged higher on reporting better than expected Q2 numbers. The bank has reported a rise of 21.25% in its net profit at Rs 1362.31 crore for the quarter ended September 30, 2013 as compared to Rs 1123.54 crore for the same quarter in the previous year. Finally, the BSE Sensex plunged 132.11 points or 0.64%, to settle at 20415.51, while the CNX Nifty declined by 43.20 points or 0.71% to settle at 6,045.85.