Markets to get a positive start of the crucial week

The Indian markets closed with modest losses in last session, traders remained cautious ahead of the RBI’s monetary policy review. Today, the start of the crucial week is likely to be in green but cautiousness is likely to prevail due to the RBI’s policy announcement tomorrow and with inflation in mind the RBI is likely to raise the repo rate by another 25 basis points.  The week is also important from the global perspective, as the traders will be eyeing the US Fed's policy-setting arm meets on Oct 29-30. Also volatility is expected on the street as the long October series will be expiring this week. There will be some concern with the report that Foreign Direct Investment (FDI) into India declined to 8-month low of $1.4 billion in August, down 38 percent year-on-year. There will be some buzz in the telecom stocks, as the Department of Telecom is likely to drop the three-year mandatory lock-in period for promoters of telecom companies under the new mergers and acquisition rules.  Also, the textile stocks are likely to be under pressure as a study by industry body Assocham has found that about 30 percent of total textile factories across India were non-operational as of 2010-11 which led to massive job losses in the sector. Traders will also be reacting to ITC and HUL numbers after both FMCG companies declared their results post market hours on Friday.

There will be lots of result announcements too.Ajanta Pharma, Atul Auto, Ceat , Dabur India, EID Parry, Emkay Global, Jindal Stainless, Lanco Industries, Maruti Suzuki, Syndicate Bank  and VIP Industries will be announcing their numbers today.

The US markets extended gains in last session on getting few more encouraging earnings announcements. The Asian markets have mostly made a positive start, on hopes that a weaker consumer confidence numbers will lead US Fed to maintain its stimulus. Though, some of the indices are marginally in red too.

Back home, Indian equity markets snapped the lackluster day of trade slightly in the red with frontline gauges ending below their crucial 20,700 (Sensex) and 6,150 (Nifty) levels in absence of any major trigger. Benchmarks traded in tight band throughout the session as investors remained on sidelines ahead of Reserve bank of India’s (RBI) policy review meet on October 29, 2013, which would decide the markets trends in near term. Some cautiousness also crept in after Finance minister P Chidambaram asked 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.” However, losses remained capped as some support came in from the statement of Prime Minister’s key economic advisory council chairman C Rangarajan, who while rejecting the IMF and World Bank’s pessimistic projections, has exuded confidence that the growth would be around 5.5 percent in the current fiscal. Some respite also came in after Global financial services major HSBC lowered India’s current account deficit (CAD) forecast for this financial year to 3.4% of GDP from 4.1% earlier. Global cues too remained choppy with European markets trading mostly in red as market participants awaited the release of economic data from Germany and the UK. Back home, sentiments also remained dampened after Rating agency ICRA slashed India’s gross domestic product (GDP) growth estimate by 0.20 per cent to 4.7-4.9 per cent for FY14, citing hardening interest rates which will have a negative impact on the already-tepid economy. Meanwhile, selling witnessed in metal and mining counter, led by around 4% fall in NMDC after reporting weak Q2 numbers too exerted pressure. The company reported a fall of 21.46% in its net profit at Rs 1318.36 crore for the quarter as compared to Rs 1678.62 crore for the same quarter in the previous year. Finally, the BSE Sensex declined by 41.91 points or 0.20%, to settle at 20683.52, while the CNX Nifty lost 19.45 points or 0.32% to settle at 6,144.90.