Markets to remain in somber mood with a soft start

The Indian markets lost half of their Monday gains in last session; there was not much on either the global or domestic front that could have supported the markets. Today, the start of the penultimate day of the F&O expiry is likely to be soft tailing the listless global cues. Meanwhile, there is report that the government may trim planned expenditure by over Rs 80,000 crore or about 15 percent of the budgeted amount in the current fiscal, in order to contain fiscal deficit within the redline drawn by Finance Minister P Chidambaram. In other development on the macro front, representatives of International Monetary Fund (IMF) have met senior Finance Ministry officials to discuss the macroeconomic situation of India ahead of its world economic growth outlook. There is likely to be some cheer in the sugar sector stocks, as the Food Ministry will soon seek Cabinet nod for providing interest-free loans to cash-starved sugar mills to help them meet working capital requirements. The oil & gas exploration companies too are likely to be in action, as the Oil Minister M Veerappa Moily has ruled out reversal of the decision to double natural gas prices from April 1 next year and said that the notification on this will be issued shortly and has decided to put 86 hydrocarbon blocks for bidding in the round X of New Exploration Licensing Policy (NELP) by January 15, 2014.

The US markets closed flat but with a positive bias, there were early gains on the back of better than expected reports on building permits and home prices but the major indices pulled back sharply going into the close. The Asian markets have mostly made a soft start on reports that after US consumer confidence unexpectedly dropped this month. Japanese Nikkei was down by about half a percent as the yen strengthened against dollar.

Back home, benchmarks resumed their southward journey after a day of pause and snapped the session with a cut of around a percentage point, as investors booked profit after the previous session’s rally. Sentiments also remained down-beat as the investors opted to remain on sidelines ahead of November F&O expiry. Earlier, sentiments remained somber after the Cabinet deferred the consideration of proposals to relax foreign direct investment norms in the housing sector and to reduce the FDI cap to 49 percent in critical areas of the pharma segment. Stocks of Public Oil Marketing Companies, viz, BPCL, HPCL and IOC witnessed heavy drubbing as oil prices regained some semblance of stability after the previous session's slide, as traders questioned how quickly the Iranian nuclear accord could turn into higher supplies. Selling got intensified after European markets made a sluggish opening, moreover, most of the Asian equity benchmarks shut shop in the red with Japanese market ending with a cut of over half a percent, as the yen strengthened against dollar. Back home, the down fall was also triggered by selling in jewellery stocks like Shree Ganesh Jewellery, Gitanjali Gems and PC Jewellers which edged lower as the Exports of gold jewellery from India fell 6.9 percent on month in October to $608.95 million. Selling was also witnessed in software counter on account of weak economic data in US and on a firm rupee. Meanwhile, sugar stocks, like Bajaj Hindusthan, Shree Renuka Sugar, Balrampur Chini etc. ended lower on profit booking ahead of UP chief Minister’s meeting with the mills owners later in the evening. Separately, an all-party delegation from Maharashtra, along with the representatives of agitating farmers’ organizations, is scheduled to meet Prime Minister Manmohan Singh about various demands of the sugar industry. Finally, the BSE Sensex plunged by 180.06 points or 0.87%, to settle at 20425.02, while the CNX Nifty lost 56.25 points or 0.92% to settle at 6,059.10.