Reforms Fail To Woo Markets

The Indian markets opened in the negative today and saw a heavy downfall shortly after due to a roughly Rs 650 crore sell order triggered by financial services group Emkay Global. The markets remained down through the rest of the day on consistent selling seen after seeming to be in an overbought position yesterday. The Sensex closed lower by 139.64 points or 0.73% at 18918.51 and Nifty closed lower by 40.65 points or 0.70% at 5746.95.

The Asian and European markets saw positive trades due to an upbeat US market. This positivity in sentiment was contributed to by Mario Draghi’s comments and by economic data from the US. The ECB President Mario Draghi, at a conference in Slovenia, said that the central bank stands ready to buy bonds to ease the region’s debt crisis. At the same time, he added that bank would not start the buying process until the time that countries request a bailout and agree to the conditions. He also ruled out the possibility of allowing the ECB to take losses on account of the Greek debt restructuring. His remarks also diminished the chances of another rate cut in the near term. Spain, however, has been facing difficulties in meeting its deficit reduction targets, raising concerns over the country's economic health. Its officials still stand firm on not needing rescue measures from the ECB's side. While Asian markets closed in the range of 0.44% and 0.50%, European markets are currently trading in the range of 0.38% and 0.76%.

The US markets have been positive ahead of the jobs data due to be released at 08:30 Eastern time. Estimates indicate the creation of 115000 jobs in September in the US and a rise in unemployment from 8.1% to 8.2%. The Federal Reserve had voiced its intention to embark on a round of easing upon disappointment from the labor data.

The morning saw a heavy downfall in the Nifty, which reached an intra-day low of 4888.20 on heavy selling triggered from Emkay Global’s dealing desk. RIL ended the day up by 0.55% after having plunged 20%, and HDFC was lower by 4.89% after falling 20%. The negative ending to HDFC was also on account of a bulk deal by Carlyle yesterday to sell off its entire share of stocks.

The IT and Teck sectors saw heavy selling today, and were lower by 1.62% and 1.65% respectively. These sectors have been underperforming due to appreciation in the rupee. The currency has been gaining strength on account of a spree of reforms being announced by the govt. The export-oriented industry, thus, has been seeing a heavy downfall every day. HCL Tech, Tech Mahindra and Wipro declined by 2.74%, 2.56% and 2.41% respectively today. Telecom too saw a steep slide, with GTL Infra, OnMobile Global and MTNL dropping by 3.77%, 4.07% and 3.96% respectively.

The automobiles sector has been charming investors of late because of the nearing of the festive season that is expected to boost sales and revive the industry. Tata Motors and Mahindra & Mahindra were up by 2.24% and 1.16% respectively. Overall, the Auto index was up by 0.55%.

Next week will be defined by how the domestic cues develop around the newly-announced political reforms. Meanwhile, the global cues are also being eyed by markets, key being the jobs data from the US. Together, these would decide the market direction for the Indian markets ahead.