Markets to extend the southward journey with a soft start

The Indian markets suffered profit booking in last session, the pessimism prevailing in the global markets too weighed on the markets. Today, the start is likely to be in red and the markets will lose further ground in early trade. The global cues are weak and there is not much on domestic front that could support the markets. There will be buzz on the street after capital markets regulator Securities & Exchange Board of India set a one-year target to complete investigations saying that the long-drawn probe processes are a thing of past, manipulators have been warned of strong action. There will be buzz in the power sector too, as the leaders of the power industry, private power producers and business chambers have sought an immediate meeting with Power Minister Veerappa Moily to discuss the various crises impacting the power sector. The PSU stocks too may see some movement, as an Inter-Ministerial Group will meet today to decide on the appointment of merchant bankers to manage the stake sale of Power Grid Corporation. There will some reaction in whole UB group stocks after DGCA suspended flying licence of the group company Kingfisher Airline.

There will be lots of important result announcements too, BASF India, BOB, Cairn India, HDFC, Idea Cellular, L&T, Merck and Tata Coffee are among the many to announce their numbers today.

The US markets suffered sharp plunge on Friday with all the major indices losing over one and half a percent, led by tech stocks on some disappointing earnings announcements and poor home sales data. The Asian markets have made a weak start with some indices trading lower by over a percent on report that Japan’s exports dropped at the fastest pace in a year. Chinese market too was trading lower on earnings concern and speculation that governments will take further steps to cool the property market.

Back home, erasing all their previous session’s gain, Indian equity indices exhibited a bleak session of performance and ended the session near low point of the day’s trade on Friday due to profit taking in select blue chip stocks. Both the frontline gauges lost their crucial 5,700 (Nifty) and 18,700 (Sensex) levels as investors kept themselves busy in offloading positions in sectors like power, metal and capital goods ahead of the F&O expiry week. Cut of about a percent in Index heavyweight Reliance Industry too dampened the sentiments. The company has said that there has been no significant improvement in ground-level decision making which has impacted the business environment. Some amount of pessimism also came in from money markets as rupee fell to a fresh one-month low near 54 versus its previous close of 53.42 on the back of heavy dollar buying by oil firms, the largest buyers in the domestic currency market. The sentiments also got bashed after provisional data released by the stock exchanges showed that foreign institutional investors (FIIs) were net sellers of Indian stocks on October 18, 2012. FIIs sold shares worth a net Rs 68.87 crore on Thursday. Also, weakness in global markets hit sentiment on the domestic bourses adversely and the frontline indices extended their downfall. Back home, major blow came in from Capital goods space which edged lower by over one and a half percent on profit booking after recent gains. ABB, Crompton Greaves, Siemens, L&T and Bhel dropped by between 0.25 to 2.33 percent. Selling in Aviation sector too dampened the sentiment; stocks like Spicejet, Jet Airways and Kingfisher Airlines declined as the number of passengers carried by air carriers declined 0.9% to 438.39 lakh during January-September 2012 over January-September 2011. However, the losses remain capped as shares of companies engaged in gems and jewellery business have rallied on back of heavy volumes in otherwise weak market on hopes of higher demand in festive season. Shree Ganesh Jewellery House, Gitanajli Gems, Titan Industries, Tribuhovandas Bhimji Zaveri (TBZ), Thangamayil Jewellery and Renaissance Jewellery rallied up to 10 percent. On the result front, there were more hits than misses. ITC reported a rise of 21.27% in its net profit at Rs 1836.42 crore in Q2, Zee Entertainment Enterprises posted a rise of 17.48% in its consolidated net profit at Rs 187.69 crore in the second quarter, Petronet LNG too reported a rise of 20.91% in its net profit at Rs 314.79 crore in Q2. Finally, the BSE Sensex lost 109.62 points or 0.58% to settle at 18,682.31, while the S&P CNX Nifty decline by 34.45 points or 0.60% to end at 5,684.25.