Markets to start on a cautious note, may take guidance from inflation numbers

The Indian equity markets suffered cut of over half a percent in last session, Infosys guidance spooked the markets and not only IT sector but the whole market went through profit booking. Today, the start is likely to be cautious with another heavyweight Reliance Industries announcing its Q2 numbers. There is expectation that the oil major will come up with sequentially better numbers, though lower than its year ago performance. Traders will also be eyeing the September inflation data as it is one of the major deciding factors for RBI’s upcoming policy stance. Economists are expecting the inflation to have accelerated slightly after the government increased the diesel prices. Sugar companies too will remain in limelight after a committee recommended allowing millers to sell sugar freely in the open market. There is some encouraging news for the investors which may boost the sentiments, it has been reported that foreign institutional investors (FIIs) poured over Rs 10,000 crore into the stock market so far in the month of October.

The US markets made a mixed closing on Friday, though the consumer sentiments improved to their best in last five years but traders remained concerned about the growth outlook and the earnings season. The Asian markets have mostly made a soft start, though China reported better-than-expected export data and the slowest inflation rate in two years.

Back home, distressed markets dented further on Friday with benchmarks ending the session with a cut of over half a percent, weighed down majorly by software and technology stocks after IT bellwether Infosys reported disappointing FY13 outlook. The combination of domestic as well as global factors led to the selling across the board and the domestic gauges snapped the session below their crucial 5,700 (Nifty) and 18,700 (Sensex) levels. The IT major also remained the top loser, pummeled nearly six percent due to lower than expected revenue guidance for the current fiscal 2013 in dollar terms. However, the company, on the consolidated basis, posted a rise of 24.29% in its net profit at Rs 2369.00 crore for the quarter ended September 30, 2012 as compared to Rs 1906.00 crore for the same quarter in the previous year. August industrial output, which despite registering better than expected pace of growth, also contributed to the carnage, as it dimmed hopes of rate cut by world’s most aggressive central bank in its upcoming monetary policy review on October 30. Industrial Production for August came in at 2.7 percent, which was higher than expectations of 0.94 percent while July output was revised to -0.2 percent from 0.1 percent (provisional) earlier. The monthly growth rates of the three sectors that constitute the IIP - Mining, Manufacturing and Electricity - for the month stood at 2.0%, 2.9% and 1.9%, respectively. Meanwhile, India’s consumer price inflation decelerated slightly in September, but still remained uncomfortably high, maintaining pressure on the central bank to continue with a tight monetary policy. Consumer prices rose 9.73% in September from a year earlier, compared with a 10.03% increase in August. Bleak global cues also added to the downside of the markets. Back home, the sentiments also got bashed by rate sensitive as realty, auto and banking all edged lower by about half a percent as rise in August IIP dimmed the rate cut hopes by RBI in its next meeting on Oct 30. However, the losses remain capped as shares of sugar stocks like Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar and Shree Renuka gained after a government panel recommended scrapping of state control on the marketing of sugar in the country. Finally, the BSE Sensex lost 129.57 points or 0.69% to settle at 18,675.18 while the S&P CNX Nifty declined by 32.00 points or 0.56% to end at 5,676.05.