Markets Start On Weak Note For June Series

As expected in our morning update, the Indian markets opened on a negative note for the third straight day consecutively on slower economic growth and weak global markets. The negative opening of the Asian markets and persisting fears form the Europe dampened market sentiments worldwide. Nifty is is trading on a flat negative note down by 0.27% at the 4911 level, while the Sensex is down by 0.22%. One of the concerns for the falling market has been the depreciation of the rupee, which is currently hovering around the 56.42 mark against the USD.

The other Asian markets opened on a negative note today as concerns rose over the health of China's economic growth in 2013. The Chinese official PMI data came in at a disappointing 50.1, lower than expected figure of 51.

There has been selling pressure in the IT space on the back of weak US economic data. The jobless claim for the week ended May 31 increased by 10000 to 383000. IT companies generate 60% of their revenues from the US, and any downfall in the economy will impact their growth in the coming year. In the Mar 2012 quarter, IT companies have already felt the heat due to the slowing European and US regions, and any further downfall from here will lead to worse times for the companies.

In individual stocks, BEML is down by 3.58% to Rs 414 after posting muted Mar quarter results. The company reported a net loss of Rs 14 crore against a profit of Rs 70 crore in the same period last year.

Among the Sensex shares, Bharti Airtel, ICICI Bank and SBI are leading with gains of 0.43%, 1.11% and 0.99% respectively. Of the major losers, Bajaj Auto, Infosys, TCS and Wipro are down by 1.58%, 1.14%, 1.18% and 1.56% respectively.

Aviation companies will see some positive momentum as oil companies may cut aviation fuel prices on the back of the decline in crude oil prices in the international market.

The market breadth, which indicates the overall health of the market, is positive. On the BSE, 1047 shares have risen and 743 shares have declined. 79 shares are unchanged.

We expect the markets to remain flat with a negative bias for the day.