Markets to remain in somber mood ahead of inflation and IIP data

The Indian markets slid for the second straight day on profit booking in last session. Today, the start is likely to remain somber and traders will be eyeing the IIP numbers and  the consumer price index data to be announced after market hours which is forecast to have risen an annualised 10 percent last month, though the government has said that containing spiralling prices was among the top priorities on its agenda. Marketmen will remain concerned with Standard & Poor’s (S&P) statement that India’s sovereign rating could come under threat if the general election due next year threw up a hung Parliament or the government was unable to push through reforms. Also, India’s export growth slipped to a five-month low of 5.86 percent in November as shipments of petro-goods, pharma, automobile and gems and jewellery fell. Meanwhile, there will be buzz in the market as market regulator Sebi has proposed to bring public servants and people holding statutory positions like regulators, who have price-sensitive information that can impact the price of stocks, under the ambit of a new set of insider trading norms. Fertilisers stocks may see some action, as Union Agriculture Minister Sharad Pawar has asked Prime Minister Manmohan Singh and Finance Minister P. Chidambaram to clear the subsidy dues to fertiliser companies as delayed payment could affect production and supplies.

The US markets ended lower in last session on concern of Fed tapering after lawmakers agreed on a way out of a budget impasse. The Asian markets have mostly made a weak start on worries that Federal Reserve is now more likely to begin tapering its monthly bond purchases.

Back home, Key domestic benchmarks once again ended the session in the red terrain extending their losing streak for the second consecutive session on Wednesday as investors opted to remain sideline ahead of Index of Industrial Production (IIP) data for the month of October and CPI data for the month of November to be announced on December 12. Though, recovery in last leg of trade helped the bourses to pare most of their initial losses. The benchmark got off to a negative start on the back of feeble global cues and extended their downfall to touch intraday lows near the psychological 21,050 (Sensex) and 6,250 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon as investors went for beaten down but fundamentally strong stocks.  Some support also came in from better-than-expected trade deficit data. India’s imports fell the most in four years, by 16.37% annually to $33.8 billion in November, leaving narrower trade deficit of $9.22 billion as against $17.2 billion deficit in November 2012, as per the latest data released by the Ministry of Commerce and Industry. Cumulatively, for the April-November period, the trade balance recorded a deficit of $99.9 billion. While, imports cumulatively declined by just 5.39% at $303.89 billion during this period. Country’s exports grew by 5.86% year-on-year in November to $24.6 billion and cumulatively rose by 6.27% to $203.98 billion in the year through November. Firm opening in European counters too supported the recovery in domestic markets. However, weakness in rupee too dampened the sentiments rupee snapping its five-day rising streak against the American currency and fell by 26 paise at 61.30 per dollar at the time of equity markets closing at the Interbank Foreign Exchange market on fresh dollar demand by importers. Selling got intensified after Standard and Poor’s (S&P) said that India’s sovereign rating may come under pressure if the general elections due by May next year end up with a hung parliament or with a government unable to push through reforms. Selling in Auto space too weighed down sentiments after car sales in India fell 8 percent to 1.42 lakh units in November from 1.55 lakh units a year ago, the second consecutive month of decline as demand fell after the festive season. Finally, the BSE Sensex declined by 83.85 points or 0.39%, to settle at 21171.41, while the CNX Nifty lost 24.95 points or 0.39% to settle at 6,307.90.