Thursday 5 December 2013

Markets to get a cautious but positive start

The Indian markets declined for the second straight day in last session awaiting the Assembly election exit poll results that turned the market nervous in final hours of trade. Today, the start is likely to remain cautious tailing the weakness in global cues. Though, traders may rejoice the results of exit poll that showed that BJP may sweep the assembly polls in four of the five states where elections were held. However, in other political development, the stormy Winter Session of Parliament will begin today with the government listing a heavy legislative agenda and Opposition demanding extension of the 12-day sitting. Meanwhile, the Centre has said that it is drafting a policy on the direct selling industry to address the concerns of consumers and strengthen the credibility of the sector. There will be buzz in the oil & gas sector stocks, as the Paris-based International Energy Agency has said that India would be the largest single source of growth in global oil demand after 2020. The telecom stocks too will see some action after the Cellular Operators Association of India (COAI) said that GSM mobile operators added 16.6 lakh new subscribers in rural areas in October to take the overall base in such areas to 27.43 crore.

The US markets could not recover and ended almost flat after a choppy last session with traders remaining concerned about the uncertainty about the outlook for the Federal Reserve’s stimulus program after payroll processor ADP reported a stronger than expected private sector job growth in the month of November. The Asian markets have made a soft start and most of the markets in the region are trading lower by about half a percent in early deals on US Fed’s taper concern.

Back home, Wednesday turned out to be a daunting session of trade for the Indian stock markets, which extended the southbound journey for second consecutive day and gave up over half a percentage point, as investors opted to remain on sidelines ahead of the assembly elections outcome on Sunday that will give a firm direction for the markets. Sentiments remained downbeat since morning tracking weak global cues. Some disappointment also came in from report that Foreign Direct Investment (FDI) into the country declined by about 38 percent year-on-year, to $2.91 billion in September. As the trade progressed, some recovery was seen in the markets, as some support came in from Prime Minister Manmohan Singh’s statement that market-based pricing and technology are essential as India is expected to become world’s third largest energy consumer in seven years. He also said that, in order to bridge the gap between supply and demand, the government is encouraging domestic and global companies to explore onshore and offshore regions. Some pessimism also came in after industry body Assocham said that narrowing of the current account deficit will help arrest depreciation of the rupee and ease inflation concerns that may soothe some nerves. Positive opening in European markets too supported the local indices. However, disappointing cues from Asian markets took their toll on Indian markets and dragged the frontline gauges below their crucial 6,200 (Nifty) and 20,750 (Sensex) levels. Back home, traders turned nervous in last leg of trade and major indices slumped to their lowest point of the day as flat numbers of the Services PMI weighed negatively on the local markets. The HSBC Business Activity Index posted 47.2 in November compared to 47.1 in October. Meanwhile, the seasonally adjusted HSBC India Composite Output Index too remained below the 50.00 mark, however, up from 47.5 in October to 48.5, as manufacturing production rose in the latest month. Selling in Realty counter too dampened the sentiments despite the Reserve Bank of India (RBI) allowing core investment companies to raise external commercial borrowing (ECB) for projects floated as special purpose vehicle in order to strengthen the flow of resources into the infrastructure sector. Finally, the BSE Sensex plunged by 146.21 points or 0.70%, to settle at 20708.71, while the CNX Nifty declined by 40.90 points or 0.66% to settle at 6,160.95.

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