Markets to make a gap-down start on feeble global cues

The Indian markets tried to stabilize in last session but ended modestly in red, today the start of the F&O expiry day is likely to be a gap-down one on weak global cues and the markets may grind lower going towards expiry. Traders are likely to remain under pressure as the International Monetary Fund (IMF) has asked emerging market economies such as India to prepare for a rainy day as they remain vulnerable to future increases in US interest rates. On the domestic front the concern is likely to increase with Reserve Bank Governor Raghuram Rajan saying that inflation is both a monetary and political issue and wanted the political establishment to understand the importance of curbing rising prices. However, there will be some solace with UN Conference on Trade and Development’s report that India’s foreign direct investment (FDI) inflow has grown despite unexpected capital outflows in the middle of the year. India has been ranked 16 among the top 20 global economies receiving the most FDI, seeing a 17 percent growth to $28 billion in 2013.

There will lots of individual scrip action based on their earnings announcements. Alembic, Arvind, Bank of India, Bayer Crop, EID Parry, EID Parry, Hero MotoCorp, HCC, Jindal Saw, JSW Energy, Muthoot Finance, Neyveli Lignite, Trent and Voltas are among the many to announce their numbers today.

The US markets once again turned lower, negatively reacting to the Federal Reserve’s widely anticipated decision to continue scaling back stimulus. Traders remained under pressure since the beginning on getting disappointing guidance from some big-name companies. The Asian markets have made a weak start and some of the indices are trading lower by over a percent after fed announced stimulus cut and as a report showed China’s manufacturing industry contracted, while the Japanese market was leading the pack with huge over three percent loss in early deals.

Back home, Wednesday turned out to be a disappointing session of trade for the stock markets in India, as the benchmark equity indices failed to hold on to the initial gains and settled the session flat with negative bias, extending their losing streak for fourth straight day. Sanguine global sentiments led to initial up-move in local markets but the psychological 6,150 (Nifty) and 20,800 (Sensex) levels proved as stern resistance levels for the markets to hold. The frontline indices could not hold on to those levels for long and witnessed abrupt selling pressure in last leg of trade, as investors chose to take profits off the table, a day ahead of January series futures and options contract expiry. Sentiments took a turn for the worse after banking counters, which traded firmly in early deals, entered into red after Indian Overseas Bank (IOB) and ICICI Bank reported rise in bad loan in Q3 FY14. IOB reported 35.56% fall in its net profit at Rs 75.07 crore for the quarter as compared to Rs 116.50 crore for the same quarter in the previous year. However, the ICICI Bank registered a rise of 12.53% in its net profit at Rs 2532.21 crore in Q3FY14 as compared to Rs 2250.24 crore in the corresponding quarter previous year. Sentiments also got hurt after the Reserve Bank of India (RBI) forecasted the Indian economic growth to fall below 5 percent in 2013-14 as the prospects of a pick-up in real GDP growth in the second half of 2013-14 have been dampened by negative growth witnessed in industrial production over two consecutive months. Investors shrugged off firm global cues with European markets trading higher in early deals, Asian markets too ended mostly higher. Back home, down-side remained capped as some support came from appreciation in Rupee. Meanwhile, stocks related to infra sector had edged higher in early deals, as the road ministry is set to modify its exit policy and make it easier for new investors to enter and replace existing ones. Finally, the BSE Sensex declined by 36.21 points or 0.18%, to settle at 20647.30, while the CNX Nifty lost 6.00 points or 0.10% to settle at 6,120.25.