Markets to extend the somber run with a soft start

The Indian markets suffered sudden slump in the late trade that dragged the benchmarks lower by over a percent in last session, there was across the board selling that took the markets to their lowest in last one month. Today, the start is likely to remain soft tracking the weakness in the global markets and Nifty may even breach its psychological mark of 6100 in early trade. Though, the fall is not likely to be as sharp as witnessed in last session and the traders will be taking some support with the report that collection of indirect taxes, excise, customs and service tax stood at about Rs 2,69,100 crore during the first seven months of 2013-14 fiscal, up 5.3 percent from the same period last fiscal year. Meanwhile, the IT sector is likely to remain buzzing, as the industry body Nasscom has said that the IT sector in the country would grow by 12-14 percent while IT exports are likely to reach $86 billion in the current fiscal on the back of adoption of new technologies and tapping new geographies by corporates. There will be some buzz in the coal and power sector too, as Planning Commission Deputy Chairman Montek Singh Ahluwalia has advocated hiking price of coal to prevent distortions in domestic energy market.

The US markets declined further on Wednesday on worries of outlook for the Federal Reserve's stimulus program after minutes of the Fed’s October monetary policy meeting that indicated that it may decide to slow the pace of its asset purchases in its coming meetings. The Asian markets, barring the Japanese Nikkei have made a soft start with many of the indices trading lower by about half a percent on US concern, while the Japanese stocks rose before the conclusion of a central bank meeting today, as the yen dropped.

Back home, Indian markets after consolidating in last session suffered brutal selling on Wednesday; there were rounds of volatility intraday with markets slipping to their lows; however there were subsequent value buying too at lower levels that supported the markets and kept the overall trade range-bound with both the major indices finding stiff resistance at 62500 (Nifty) and 20900 (Sensex) levels for most part of the day, but sudden and sharp late hour profit booking dragged the markets lower and Nifty marked its biggest one day loss since September 30. The sluggishness in the local markets were mainly induced by the weak trade in the global indices, where the US markets ended lower, while the Asian markets mostly ended in red. The European markets too made a soft start and weighed on the sentiments of the local markets recovery attempts. Back home, markets for most part of the day lacked any trigger to move in either direction and remained range-bound till the last hour when sudden selling dragged the bourses to their lows. The Rupee choppiness weighed on the sentiments too, which moved down on demand for dollars by state-run oil refiners. However, there was some cautiousness since beginning, as the Paris-based Organisation for Economic Co-operation and Development (OECD) said that Indian economy is expected to improve marginally in the current financial year with its GDP at market price projected to expand by 3.4 percent from 3.3 percent in the previous fiscal. Sectorally, though non of the indices was spared in the last minute onslaught but the major drag were the banking, consumer durables, oil & gas and capital goods. However, the broader indices showed smart resilience and when benchmarks lost over a percent they managed to end flat. There was some buzz in the sugar companies located in the state of Uttar Pradesh and all the sugar stocks were seen in demand on reports that the Centre has convened a high-level meeting to discuss a relief-package for the crisis-ridden sugar industry in Uttar Pradesh and Maharashtra after 65 private mills, including Bajaj Hindusthan, Balrampur Chini Mills and Dhampur Sugar, announced suspension of operations, following an impasse over announcement of state sugarcane price. On the other hand, the PSU oil marketing companies gave a mixed signal despite oil minister M Veerappa Moily saying that the diesel prices will be deregulated in six months with gradual price increases. Finally, the BSE Sensex plunged by 255.69 points or 1.22%, to settle at 20635.13, while the CNX Nifty declined by 80.45 points or 1.30% to settle at 6,122.90.