Markets to see some recovery tailing good global cues

The Indian markets in continuation to their sharp fall plunged by another about two percent in last session, mainly on the back of global cues and the tapering fear that spooked the whole global markets. Today, there is likely to be some recovery with traders tracking the bounce back in global markets likely to go for value buying at lower levels. Traders will also be taking cues from Finance minister P Chidambaram’s statement that the annual headline inflation is expected to moderate to near 5 percent, as there was reasonable price stability in some major commodities. Finance Minister has also made a strong pitch to overseas Indians and has said that the country is a safe destination with a potential of 8% growth and ample investment opportunities. There will be some buzz in coal and power sector, as the coal ministry has decided to de-allocate 11 captive coal blocks including three mines of Jindal Steel and Power, besides forfeiting the bank guarantees of six firms and asking five to expressly furnish bank guarantees. The telecom stocks too will be in action as the Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, is likely to discuss the details of the third round of spectrum auction as well as M&A guidelines for the sector.

The US markets made a good recovery and the Dow reached a new record closing high above 16,000 after Labor Department showed a bigger than expected drop in initial jobless claims and traders went for buying at lower levels after the recent pullback. The Asian markets have mostly made a green start and the Japanese index was taking the lead, as the yen weakened against the dollar, boosting the earnings outlook for Japanese exporters.

Back home, the Mayhem at the Dalal Street enlarged on Thursday and there was no respite after the last session’s fall. Traders remained in selling mood throughout the day and at no point of time there was any recovery attempt with benchmarks losing their long held psychological bastions of 20250 (Sensex) and 6000 (Nifty). Both the benchmarks logged their biggest one day fall since September 3. There was selling by worried foreign investors who opted to reduce their holdings on raising concerns that US Fed will be going for tapering anytime soon. The fall was also aggravated by the weakness in rupee, which in tandem with the other emerging market currencies declined further. The global markets remained in somber mood and gave cue of soft start for the Indian markets, as the US markets ended lower overnight after the minutes of Fed’s October meeting stated that many officials at the central bank think that it could decide to slow the pace of purchases at one of its next few meetings. The Asian pack made a soft start tailing the US markets and as Chinese manufacturing fell more than expected in a flash report. The European markets too made a sluggish start with major indices losing about a percent in opening trade. Back home, the domestic markets after a sharp plunge in the early trade continued their decline throughout the day and the trade remained choppy with no serious attempt to break into green. Traders remained concerned with the Fed’s indication fearing that exodus of FIIs fund will once again began. As per the data FIIs bought shares worth Rs 80 crore on Wednesday, compared with more than Rs 1000 each on Monday and Tuesday. There were also reports of basket selling by foreign investors that led to sudden fall in the markets. Traders even overlooked World Bank president Jim Young Kim statement that India was expected to have a good third quarter. However, the World Bank president acknowledged that the developing countries are unlikely to go back to the 10 plus growth rate which was experienced before the economic recession in the US. Back on street, the fall aggravated after the weak start of the European markets and by the end markets slumped to their lowest point of the day with Nifty slipping below 6000, last seen on November 13. Selling was spread across the board and both the benchmarks suffered three digit cut and all the sectoral indices ended in red, lower by 1-2.5%. Capital goods, banking, realty, PSU and power were the worst performer, while the broader indices too suffered cuts of around a percent. Finally, the BSE Sensex slumped by 406.08 points or 1.97%, to settle at 20229.05, while the CNX Nifty declined by 123.85 points or 2.02% to settle at 5,999.05.