Asian Gloom Keeps Markets Down

The Indian markets opened negative today, marking a subdued beginning to the Nov series. The markets have been range-bound through the month. They will gain a clearer picture on their direction based on how the corporate earnings pan out and also from any triggers on the fiscal or the monetary front. The downward opening was also weighed upon by the Asian markets, which have seen a heavy downfall since their opening today. With this, the Sensex is trading lower by 73.65 points or 0.39% at 18684.98 and Nifty is trading lower by 21.45 points or 0.38% at 5683.85.

The sentiment around the earnings in Asia has turned sour after the metals and mining companies saw a heavy decline in their quarterly numbers due to the slowing demand from China. Technology too has been looking gloomy after the world’s most valuable company Apple announced results that fell short of expectations. To add to this was a dull macroeconomic environment all around the globe. Moreover, Japan’s core consumer prices fell for the 5th straight month, adding pressure on the central bank to reverse the deflation situation and achieve its inflation target. From mixed cues from the US to a deteriorating European economy, the factors have only been adding up to the decline seen in the Asian markets. With the markets lower in the range of 0.77%-1.65%, investors are keeping a keen eye on the GDP data from the US that is to be declared later today.

On the domestic front, while the broader indices are trading significantly lower, the mid-caps and small-caps are flat to positive, trading higher by 0.12% and 0.01% respectively. Only 3 of the 13 sectoral indices are trading positive, with Auto and Realty up by 0.4% each. The overall breadth seems mildly skewed towards the negatives, with 584 advances and 683 declines.

The automobile sector is trading higher mainly on account of the festive season that usually makes Q3 the strongest quarter of the year. It is expected to show a boost in sales in an investment climate that is heavily weighed downwards due to unfavourable economic conditions. Moreover, the sector is seeing upward support on account of Mahindra & Mahindra's Q2FY13 results, which has shown the company growing regardless of a subdued environment. The stock is trading higher by 1.61%.

Other result-driven movements include Nalco, which reported a 96.5% drop in net profit although its topline grew by 12% YoY. The stock price of Nalco is currently trading lower by approximately 4%. HUL too is expected to announce its results today and is trading higher by 0.23% ahead of the announcement.

The market direction is likely to be determined by the results announcements, as many major companies are slated to declare their results today. Of the major ones are Dabur India, GAIL India, HUL, ICICI Bank, IDFC, JSW Ispat, NTPC, PNB, Procter & Gamble, Sesa Goa and United Bank.