Monday 6 January 2014

Markets to make a soft to cautious start of the new week

The Indian markets extended their decline in last session, though there was a good comeback in last but still the benchmarks ended the session in red. Today the start of the new week is likely to remain mildly soft-to-cautious and after weak manufacturing numbers, traders will be eyeing the Services PMI to be announced later in the day. There will be some concern with a study report by industry body Assocham, saying that uncertainty over the outcome of the upcoming Lok Sabha elections is likely to cast a shadow on the economy, adding to investor concerns. FII movement too will be watched in today’s trade, as the global fund managers would be returning to their desk after the New Year holiday. However, marketmen will be keenly eyeing the other major developments like the start of the earnings season and IIP data to be announced later in the week for further course of action. The sugar sector stocks may see some action, as the government has notified the modalities for the beleaguered sugar industry to avail of interest-free loans to the tune of Rs 6,600 crore from banks for payments to cane growers. There will be some buzz among the pharma stocks on report that FDI in the sector jumped by 86.5 per cent to $1.08 billion during April-October period of the current fiscal amid concerns over continuous mergers and acquisitions of domestic drug makers by multinationals.

The US markets ended lower in last trading session after Bernanke’s speech acknowledging that economy has a long way to go to return to normal. The Asian markets have mostly made a weak start with the Japanese market snapping its strongest rally in over four years as yen strengthened against the dollar.

Back home, extending their southward journey for third straight session, Indian equity benchmarks ended the lethargic day of trade slightly in the red on Friday. Domestic bourses traded in very tight range throughout the session as investors remained on sidelines ahead of third quarter corporate earnings, beginning on January 10, 2013 with IT major Infosys and private sector bank IndusInd Bank announcing their numbers. Sentiments remained dampened since morning on report that the government is mulling hiking the quota of subsidized LPG cylinders to 12 per household in a year from the current limit of 9, a move which on implementation would definitely increase the subsidy burden. Frontline gauges lost some more ground after Prime Minister Manmohan Singh disappointed street in his press conference as there was lack of announcement of any future trajectory to boost Indian economy. The domestic bourses witnessed some recovery in last leg of trade supported by firm opening in European markets. Back home, sentiments also remained dampened after Indian rupee depreciated to two-week low of 62.47 per dollar at the time of equity markets closing versus previous close of 62.26 per dollar. Power stocks slipped after CCEA approved the proposal to amend the policy on mega power projects. As per the proposal, power generating firms can take benefit from this policy only after fulfilling certain mandatory conditions as the developer must tie up at least 65 percent of the installed capacity through competitive bidding and remaining 35 percent of the installed capacity should be through the regulated tariff. Meanwhile, metal and mining stocks edged lower for the second day in a row after a gauge of China’s non-manufacturing industries declined. Additionally, auto stocks slide on weak December sales. Bajaj Auto registered a 13% drop in total sales to 2,97,776 units in December 2013 against 3,43,946 units in December 2012. Hero MotoCorp declined after the company reported fall of 3.07% in December sales at 5,24,990 units as compared to 5,41,615 units sold in the corresponding month last year. Finally, the BSE Sensex declined by 37.00 points or 0.18%, to settle at 20851.33, while the CNX Nifty lost 10.00 points or 0.16% to settle at 6,211.15.

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