Lacklustre Trades End Marginally Up, US Fed Meet Awaited

After opening on a flat note today, the Indian markets witnessed a lacklustre trading performance for most of the session and finally closed with marginal gains. The Sensex and Nifty closed with gains of 0.22% and 33% respectively. There was no major trigger during the day. The other global markets also seemed to be trading in a range, awaiting the US Fed meeting which is expected to announce some stimulus measures to boost growth in the economy.

We, at DSIJ, believe that the Indian markets will see weakness in the near term on the back of various concerns looming over the economy. High rupee depreciation, a slowdown in the economy, a mounting fiscal deficit and spiralling inflation figures have not yet been fully discounted. Further, the global markets too are looking very uncertain. Fitch downgraded India's credit outlook to a negative rating, and today, it has further downgraded SBI and 8 other Indian banks, citing higher exposure to sovereign debts.

The other Asian markets closed on a mixed note today. Hang Seng and Nikkei closed up by 0.52% and 1.10% respectively, while Shanghai closed lower by 0.31%. Investors across the globe are looking forward to the Fed meet, which is expected to announce stimulus measures.

After opening on a flat, negative note, the European markets too have gained some positive momentum led by the cyclical stocks. There too, investors are anxiously waiting to see if the US Fed announces further stimulus measures to support the economy.

Dow Jones Futures is currently trading 3 points or 0.02% up at 12765, indicating a positive sentiment in the US markets.

Among the major sectoral indices, Metals, Capital Goods and Pharma closed with leading gains of 1.31%, 1.27% and 1.12% respectively. Capital Goods was up on the back of news that the government has proposed to increase the import duty on foreign power equipment, which will benefit the domestic companies. On the other hand, the IT and Teck indices were among the major losers, down by 0.45% and 0.43% respectively.

In the 30-share Sensex pack, Dr Reddy's Laboratories and ONGC closed with gains of 2.96% and 1.91% respectively. Of the losers, Bharti Airtel, Hindalco and ITC were down by 1.29%, 0.86% and 0.78% respectively.

Looking at individual stocks, HCL Tech jumped by 3% to Rs 486 over news that the company is a front-runner to bag Disney's multi-million order, valued at over US$ 800 million. Educomp Solutions spurted up by 11.2% to Rs 152 after a filing on the BSE which stated that the company has tied up US$ 155 million to pay off FCCBs worth US$ 78.5 million on the due date in Jul 2012. Hindustan Zinc also jumped by 4.41% to Rs 121 on the back of reports that the company is looking for a stake sale.

The market breadth, which indicates the overall health of the market, was positive for the day. Out of the 3183 stocks traded on the BSE, 1874 advanced, 1160 declined and 149 remained unchanged by day's end.

We expect the markets to remain volatile and negative for tomorrow on the back of the uncertain global environment.