Markets to get a soft-to-cautious start

The Indian markets despite a sluggish trade managed to end higher in last session. There was not much on the economy front to support the markets while the rupee too depreciated, weighing down the markets. Today, the start is likely to be soft-to-cautious taking the cues from the global markets. Traders will be eyeing the rupee movement as all the emerging-market currencies have weakened with Fed tapering once again in sight. Though, there will be some support on the economy front, as after the Planning Commission deputy chief, Chairman of the Economic Advisory Council to Prime Minister C Rangarajan too has said that Current Account Deficit (CAD) will go down well below $70 billion this fiscal. There is some good news for the manufacturing sector, as the Commerce and Industry Ministry is working on a proposal on giving interest subsidy to the sector and the Department of Industrial Policy and Promotion (DIPP) is considering an interest subvention of 3-4 percent, which could help in shoring up growth in the sector. Meanwhile, the corporate houses have asked the Reserve Bank of India to cut the cash reserve ratio (CRR) by at least 50 basis points and allow banks to classify infrastructure loans and exports as priority sector loans in its his first half-yearly monetary policy on October 29.

Also, there will be lots of result announcements including IT major Wipro, Cairn India, Mahindra Lifespace, Gujarat Pipavav, KPIT Cummins SKF India, ING Vysya Bank and Yes Bank etc to keep the markets buzzing.

The US markets made a flat closing on Monday ahead of the monthly jobs data to be released on Tuesday and shrugged off the report that existing home sales fell 1.9 percent to a seasonally adjusted annual rate of 5.29 million in September. The Asian markets have made a mixed start and traders in the region are eyeing US jobs data to gauge the Federal Reserve’s stimulus action.

Back home, key domestic benchmarks managed to keep their head above water on Monday, extending their gaining streak for the second straight day, after a stirring tussle between bulls and bears throughout the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to close at highest level since November 2010. Overall, sentiments remained up-beat as some support came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that Current Account Deficit is likely to be lower than the projection of 3.8 percent of the GDP and India will be in a better position to neutralise the impact of the tapering of monetary stimulus by the US Fed. Some boost also came in after Reserve Bank of India (RBI) said that it has no immediate plan to close the dollar-swap window for oil companies and it will be done in a calibrated manner. However, gains remained capped as investors booked profit in software and technology counters post some encouraging second quarter earnings. Depreciation in Indian rupee against dollar too weighed down sentiments. Supportive cues from US markets gave a good start to the local markets and sentiments remained up-beat on hopes that the Fed will delay the tapering of its bond buying programme. However, disappointing start of European markets took their toll on domestic sentiments and capped up-side. Back home, sentiments also got some boost from report that foreign institutional investors (FIIs) bought shares worth a net Rs 1752.98 crore on October 18 2013. While, some support came in from capital goods counter after industry heavyweight L&T came up with a better than expected numbers during the weekend. Meanwhile, sugar stocks like Bajaj Hindusthan, Shree Renuka Sugar, Balrampur Chini, Mawana Sugars and Rana Sugars all edged higher during the trade on report that India’s sugar output dropped by 4.5% to 25.14 million tonnes in 2012-13 marketing year ended last month, due to lower crushing and recovery levels in key producing states. Additionally, stocks related to metal and mining counter remained on buyers’ radar as data last week showed acceleration in China’s GDP growth in Q3 September 2013. Finally, the BSE Sensex added 11.00 points or 0.05%, to settle at 20893.89, while the CNX Nifty gained 15.60 points or 0.25% to settle at 6,204.95.