Markets to get a soft start tailing weak regional cues

The Indian markets continued trading choppy and snapped the last session with modest losses after touching their three years high. Today, the start is likely to be soft tailing the weakness in regional peers. Traders will be cautious with Finance minister P Chidambaram asking financial sector regulators to put in place all possible measures to avoid any adverse impact on India from the US scaling back its stimulus programme, which he expects “sooner or later.” There will be some concern ahead of the RBI’s policy announcement next week after the FM’s caution. However, there will be some support from the statement of Prime Minister’s key economic advisory council chairman C Rangarajan, who while rejecting the IMF and World Bank's "unduly" pessimistic projections, has exuded confidence that the growth would be around 5.5 percent in the current fiscal. There will be some buzz in the aviation sector after the FIPB cleared the proposal of Tata Sons and Singapore International Airlines for a 51:49 joint venture to set up an airline in India.

There will be lots of important result announcements to keep markets buzzing. Adani Ports, Alembic Pharma, Bharat Forge, Colgate Palmolive, Gail India, HT Media, ICICI Bank, IOB, ITC, Just Dial and KEC Intl are among the many to announce their numbers today.

The US markets ended higher on the back of some upbeat earnings announcements, buying interest was generated by the report showing Chinese manufacturing growth hit a seven-month high, while on the domestic front the initial jobless claims dropped last week. The Asian markets have mostly made a soft start on some weak earnings announcement and on concern that Fed will start tapering.

Back home, after hitting 3-year highs in early deals, Indian equity benchmarks failed to hold the momentum and ended the session slightly in the red, as investors opted to book profit off the table ahead of Reserve bank of India’s (RBI) policy review next week. However, markets made a stellar start with both the frontline gauges hitting their three year highs, surpassing crucial 21,000 (Sensex) and 6,200 (Nifty) levels in early deals. Some support came in from buying in banking stocks after Finance Ministry finalized the Rs 14,000-crore capital infusion plan for public sector banks to augment their capital base and promised another tranche in the fourth quarter of the current fiscal. Early buying in telecom stocks too aided the sentiments after the Telecom Regulatory Authority stuck to its earlier stance on pricing of spectrum, which calls for up to 60 percent cut in the reserve price of spectrum in the upcoming third round of auction. Global cues too remained supportive with European markets making a positive start, with a survey showing a pick-up in manufacturing activity in China cheering investors. Moreover, most of the Asian equity benchmarks ended the session in the green terrain. Back home, markets in second half gave-up all their gains, as investors opted to book profit at higher levels awaiting RBI’s policy review meet on October 29, 2013, which would decide the markets trends in near term. Meanwhile, strength in rupee, that supported the equity markets in early deals, too saw paring most of its gains. Sentiments also got dampened after India Ratings & Research said that India’s GDP growth will remain below five percent mark at 4.9% in the current financial year on account of a mix of domestic and external factors. Selling in software pack continued for second straight day. Wipro prolonged its downfall for another day after weak revenue guidance, while stocks related to cement sector remained under severe selling pressure after Ambuja Cements reported 45.40% fall in its net profit at Rs 165.97 crore for the September quarter. Aviation pack  too showed subdued trend, down by 2-3% after second-biggest carrier by domestic market share, Jet Airways reported its worst quarterly loss at Rs 891.01 crore for the quarter as compared to a net loss of Rs 99.67 crore for the same quarter in the previous year. Finally, the BSE Sensex declined by 42.45 points or 0.20%, to settle at 20725.43, while the CNX Nifty lost 14.00 points or 0.23% to settle at 6,164.35.