Markets Volatile, Kingfisher Zooms 7%

The Indian equity markets are trading flat ahead of the September F&O series expiry today. The Sensex is trading 43 points up and Nifty is higher by 10 points.

In the meantime, Credit Suisse has cut India's GDP forecast to 6% from the previous estimate of 6. 5%. Now, there seems a rush among brokers to cut the GDP growth forecast. We had seen a similar sort of thing happening when India’s credit rating outlook was downgraded. Many brokerage houses are cutting India's GDP growth forecast after the Planning Commission itself said that the growth in the next five years may not be over 8%. The markets, however, have not shown any impact of this as they are largely driven by high liquidity and the reforms in the FDI, Insurance and Aviation sectors.

The Asian markets have shown a partial recovery after the initial negative movement, but the trades seem capped. Nikkei has slipped into the negative, while Shanghai and Hang Seng are currently up by over 0.3% each.

On the indices front, Auto is the top gainer, up 1%. Three key stocks on the index M&M, Maruti Suzuki and Tata Motors are trading with over 1% gains at the moment and are taking the index higher. Capital Goods is also up 0.7%, as L&T has gained 2% by this time. The defensive FMCG index is also up by 0.5%. Overall though, most of the indices are trading flat, with Oil & Gas showing a decline of over 0.2%.

Among the Sensex stocks, Tata Power is 2% up and is the top gainer on the index. Jindal Steel has also gained 2%. State-owned Capital Goods major BHEL has lost 1.4% over profit booking. Coal India is also down 1%. IT majors Infosys and Wipro are down at this moment as the rupee appreciation would lower their revenues.

In other stocks, United Spirits has surged by 8% again over the talks with Diageo. The shares of Kingfisher Airlines have also soared 7%. The promoters of the company has said that they are in talks with foreign airlines. Reliance Communications has surged over 1% as the company has raised its prepaid charges and will lower tariffs.

Ahead today, the Supreme Court will give its verdict on whether the natural resources in the country should be auctioned or not. This verdict will have a long term implication on telecom, power and gas companies, and hence, the markets are awaiting the outcome.

We expect the markets to show volatility due to the September series expiry.