Markets likely to get a flat-to-positive start; local cues to give direction

The Indian markets gained marginally before going for a day’s break, though the trade remained cautious expecting some more reform measures from the government but traders were consoled by the steady growth in manufacturing and some upbeat sales numbers from the auto companies. Today, the start is likely to be a bit cautious-to-flat, the global cues are mixed and there is not much positive trigger from the domestic front too. There will be buzz in the infra sector as a high-level committee, headed by HDFC Chairman Deepak Parekh, will submit its report to Prime Minister Manmohan Singh on funding of infrastructure sector, the requirement of which has been estimated at close to $1 trillion during the 12th Plan period. The telecom stocks too will continue to be in limelight as the issue of refarming of radio waves will be discussed at an EGoM today. The Department of Telecommunication (DoT) in its notice inviting application (NIA) on September 28 has increased the number of spectrum blocks in 1800 Mhz band for auctions by three, except in Delhi and Mumbai circles. However, there is not good news for the rate sensitive’s, as Reserve Bank of India’s deputy governor Subir Gokarn has once again reiterated that inflation is stubbornly high and is a barrier to economic growth. There will be buzz in the Kingfisher Airlines stocks, the company has not paid staff since April and has been asked to settle wages before it can resume flights.

The US markets giving up their early gains, ended flat on Tuesday. The European worries heightened on speculation that Spain will soon request a bailout. Also, there was evidence of growing caution among traders about third-quarter earnings season, which will pick up steam later this month. The Asian markets made a mixed start with some indices gaining on hopes that China will take step up measures to stimulate the economy after its services industry weakened.

Back home, Benchmark equity indices, after trading cautiously, managed to end the session slightly in the green holding their crucial 5,700 (Nifty) and 18,800 (Sensex) levels supported by buying in last leg of trade amid firm European cues. However, the gauges stuck in a tight range in trades as investors remained on the sideline awaiting the Parthasarthi Shome panel’s final report on GAAR and also its recommendations on retrospective amendments. Shome was likely to submit the report to Finance Minister P Chidambaram later in the day. Separately, the much awaited Kelkar Committee report was made public on Sept 28. The panel in its report has said that fiscal deficit can be reined in at 5.2% of GDP for the current financial year - but only if subsidies are cut. The cautiousness prevailed for most part of the day’s trade and gauges traded near their pre-close level after India’s merchandise exports fell by nearly 10% in August to $22.3 billion while imports fell by 5% to $38 billion.  The trade deficit for the month stands at $15.6 billion. India’s goods exports have fallen in four out of the past five months amid weak demand in major export destinations like the United States and Europe. India’s purchasing managers’ index (PMI) too was unable to give any boost to the bourses as manufacturing activity remained more or less steady in September compared to the previous month, though export orders and output saw healthy gains, a business survey showed today. The HSBC manufacturing purchasing managers’ index (PMI) stood at 52.8 in September, unchanged from August, which was a nine-month low. The domestic indices also gained some strength from renewed buying in software pack as scrips like Infosys, TCS, Wipro, HCL Technologies and MphasiS edged higher after recent declines. Also some support came after cement shares extended their recent rally triggered by hopes that construction activity will pick up pace. The BSE Sensex gained 61.17 points or 0.33% to settle at 18823.91, while the S&P CNX Nifty rose by 15.50 points or 0.27% to close at 5,718.80. Markets remained closed on Tuesday on account of Mahatma Gandhi Jayanti.