Sensex struggles in another muted session

Main Indian stock indices eked out slender gains in yet another lackluster session, as market players remained on the sidelines after pushing the indices to 15-month highs. Investors are also cautious before the start of the quarterly corporate earnings season. Infosys will be the first big company to announce its results on October 12. The same day, the Government will come out with its latest report on the industrial production. Indian markets will also partly be influenced by trend in the global markets. The eurozone debt crisis continues to act as a major overhang for the global economy. The US economy too seems to be losing some steam while China too is grappling with a deeper-than-anticipated slowdown. The monthly US jobs data will have some bearing on global markets in the near term, along with events out of Europe. The upcoming US Presidential election and once-a-decade leadership change in China is also something to keep on one’s radar over the next few weeks. While in China, a leadership change may not lead to any material change in economic policies, the same cannot be said of the US. Back home, the markets will focus on the RBI’s monetary policy meeting on Oct. 30. The Government has been taking a series of measures to try and restore investor confidence in the Indian economy. Some more policy steps appear to be on the anvil and the markets are keenly awaiting the same. Coming to the markets, the BSE Sensex and the NSE Nifty gained ~0.2% each to end at 18,869 and 5,731, respectively. Overall trading in the main indices was pretty much rangebound. As has been the case lately, much of the action was seen outside the Large-Cap indices. While the BSE Small-Cap index rose by ~1%, the BSE Mid-Cap index was up by ~0.6%. In terms of sectoral indices, Oil & Gas, PSU and Pharma indices were the top leaders followed by Metals, Capital Goods and FMCG indices. Auto, Consumer Durables and IT indices were the biggest losers. Banking, Power and Realty indices were rather subdued. HUL, Dr. Reddy’s, Coal India, Hindalco, TCS, RIL, Sterlite Industries, ONGC, SBI, Tata Steel, IDFC, Siemens, Ambuja Cements, JP Associates, Sesa Goa and HCL Teck were the noteworthy gainers in the two main indices. Jindal Steel was the big loser, down almost 5%. PowerGrid Corp, Hero MotoCorp., Bajaj Auto, Axis Bank, Infosys, Tata Power and Kotak Bank were the top losers. The INDIA VIX was up ~1% today. Lovable Lingerie, Usha Martin, Ess Dee Aluminium, Anant Raj Industries, India Infoline, Birla Corp., Sintex Industries, Citu Union Bank, Edelweiss, Aban Offshore, Tata Global, Max India, Motilal Oswal, BEML, Adani Enterprises and TV18 Broadcast were the notable winners in the BSE 500 index. Tulip Telecom, Kingfisher Airlines, Deccan Chronicle, HCL Infosystems, SpiceJet, MCX, Noida Toll and Dewan Housing Finance were the biggest losers in the broader market. The rupee inched higher on bunched up dollar inflows following the public holiday on Tuesday. The Indian markets were closed on Tuesday on account of the Gandhi Jayanti national holiday. The rupee rose today to a fresh five-month high of 52.28 against the US currency in early trade on continued dollar selling by exporters and some banks. Besides, a higher opening in the local equity markets also supported the rupee. However, the dollar's gains against other currencies in the overseas markets capped the rupee's gains. India's first-quarter current account deficit (CAD) is still outside the comfort zone, the Reserve Bank of India's (RBI) deputy governor Subir Gokarn said on Wednesday. The CAD fell to US$16.55bn in the quarter ended June 30, 2012, down from an all-time high of US$21.76bn in the January to March quarter, and also below the US$17.54bn deficit posted in the first quarter of last fiscal year. Gokarn spoke on the sidelines of an industry event in Chennai on Wednesday. He also said that inflation rate may remain above the RBI's comfort zone until the end of the year, the RBI Deputy Governor said. The central bank might revise its inflation forecast at the Oct. 30 monetary policy review, Gokarn said. The Government must tackle subsidies to restore fiscal discipline, Gokarn said today. Shares of Infosys Ltd. fell on Wednesday after CLSA's sales team said that the stock could drop as much as 40% from the current levels and announced a price target of Rs 1566. "The recent appreciation in the Indian currency might prove negative for the sector as well as for Infosys and its prices could fall," CLSA said in a sales note to clients. Infosys may cut its annual guidance when it reports quarterly results on October 12 because of a recent appreciation in the rupee and potential wage hikes. Shares in infrastructure companies gained ahead of a Government panel meeting scheduled for later in the day. The committee has been mandated to review existing policies and suggest necessary changes in the investment framework towards the infrastructure sector. Key Asian markets like in Japan and Singapore too closed in the red today. Markets in China and South Korea were closed for extended weekly holidays. In Asian trading, Japan’s Nikkei Stock Average declined 0.5% while Australia’s S&P/ASX 200 index advanced 0.1% to a 14-month high. Hong Kong’s Hang Seng Index was up marginally after a strong start. Holidays in China and caution ahead of Friday’s key US jobs report kept market players on tenterhooks. Data out of China showed that the nation's non-manufacturing PMI fell to 53.7 in September from 56.3 in August and Chinese consumer sentiment weakened in September for a third month. Meanwhile, European stock indices declined at start today, weighed down by concerns that Spain may not immediately ask for a formal bailout. The European Central Bank (ECB) and the Bank of England (BOE) officials are due to meet tomorrow to review their monetary policies. The pound held losses against the euro. The yen dropped against the dollar with Bank of Japan also preparing for a two-day policy meeting. Australia’s dollar sank after data showed the nation’s trade deficit was wider than forecast. Private sector business activity across the debt-strapped eurozone remained in doldrums last month, with France and Spain witnessing a steeper drop compared to others, as tough austerity measures continued to bite. The widely tracked survey sparked speculation that another recession was now inevitable. The index fell to a four-month low at 46.1 versus 46.3 in August, coming in a tad above a preliminary estimate of 45.9. The services PMI fell to its lowest level since July 2009 at 46.1, down from 47.2 in August.