Markets to prolong the weakness with a soft start

04 Apr 2014 Evaluate

The Indian markets witnessed some profit booking and despite recovery in last hours, snapped their winning streak in last session. Today the start is likely to remain cautious and some more downside can be expected with no major positive cues in sight. Traders will also be concerned about an International Monetary Fund report stating that India’s declining economic growth, which has touched a decade's low of 4.5 percent in 2012-13, is mainly due to internal factors. In its World Economic Outlook, it said that External factors have generally been much less important compared with internal factors for relatively large or closed economies such as China, India and Indonesia. Banking stocks that have turned a bit somber in last session may get some respite with a RBI report showing that bank deposits grew by 14.64% year-on-year to Rs 7,739,387 crore as on March 21, while the credit grew at 14.31 per cent year-on-year to Rs 6,013,085 crore, as against Rs 5,260,459 crore in the same period last year. On the other hand realty stocks may see some pressure on report that in 2013, investments in India’s real estate sector fell 65 per cent to $1.2 billion, making the country the 10th most invested region in Asia-Pacific.

The US markets ended modestly lower in last session ahead of the release of monthly jobs report on Friday. Sentiments were also weighed down by the report showing a bigger than expected increase in weekly jobless claims. The Asian markets have made a cautious start and some of the indices are trading in red in early morning session, waiting for US payrolls data, a much stronger numbers could reignite speculation of an earlier rate hike from the US Fed.

Back home, snapping six days winning streak, Indian equity benchmarks ended the session slightly in the red with a cut of around a quarter percent. However, markets managed to minimize damage in last leg of trade, as investors went for value buying. Earlier, markets after a positive start entered into red terrain with investors booking profit after a six-day consecutive rally. Sentiments also remained dampened after the HSBC services Purchasing Managers’ Index (PMI), based on the survey of around 350 private service sector companies, fell to a three-month low of 47.5 in March from 48.8 in February, below 50 mark for the ninth successive month that separates growth from contraction. Depreciation in Indian rupee against dollar too weighed down the sentiments. On the global front, European markets made a sluggish start, though most of the Asian equity indices ended the session in the green, as the Japanese yen weakened to a two-month low and China’s government announced stimulus policies to support growth. Back home, stocks related to banking sector fell across the board after the Reserve Bank of India (RBI) on April 2 clarified that as indicated in its circular dated August 23, 2013 the option for spreading the Mark to Market (MTM) losses over the three quarters has ended on March 31, 2014 and no further extension is been allowed. Shares of banking license hopefuls declined, as RBI after a gap of a decade and from 25 contenders granted ‘in-principle’ approval to only two applicants, State-run IDFC and Kolkata-based microfinance firm Bandhan Financial Services. Aviation stocks rallied, triggered by state-run oil marketing companies on April 1, 2014, announcing reduction in the price of aviation turbine fuel. Finally, the BSE Sensex lost 42.42 points or 0.19%, to settle at 22509.07, while the CNX Nifty was down by 16.45 points or 0.24% to settle at 6,736.10.

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Markets to prolong the weakness with a soft start

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