Indian markets to extend their weakness with a soft start

07 Apr 2014 Evaluate

The Indian markets suffered sharp cuts in last session as traders came into profit booking mood at the all time high levels. Today, the start of the holiday truncated week is likely to remain somber tailing week global cues. Traders will be concerned with an HSBC survey report saying that private sector activity in emerging market economies fell for the fourth consecutive month in March. As per the report, while China posted a marginal decline for the second month running, India slipped back into contraction. Today the pharma sector is likely to be buzzing, as the Sun Pharmaceutical Industries and Ranbaxy Laboratories have entered into definitive agreements pursuant to which Sun Pharma will acquire 100% of Ranbaxy in a $4 billion all-stock transaction. The merger between the two companies will create India's largest pharmaceutical company and the world's fifth largest generics company. There will be some buzz in the banking stocks too, as the RBI Governor Raghuram Rajan has said that Corporations and banks should not find artificial fixes for non-performing assets, and it was important for them to clean up their balance sheets and focus on putting the asset back on stream.

The US markets slipped in last session on getting mixed monthly jobs data, while the non-farm payroll employment rose, the unemployment rate remained same at previous month’s level. The Asian markets have made mostly a soft start, with some of the indices snapping their nine days gaining streak, led by Japanese market ahead of the Bank of Japan’s two-day policy meeting.

Back home, extending their previous session’s southward journey, Indian equity benchmarks ended Friday’s trade in the red with a cut of over half a percent, with market participants squaring off their positions ahead of the 9-phase Lok Sabha elections starting from April 7, 2014. Domestic bourses, throughout the session, traded in the red and ended the session near intraday lows, below their crucial 22,400 (Sensex) and 6,700 (Nifty) levels, as sentiments remained dampened on International Monetary Fund’s 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. Global cues too remained dismal, as most of the Asian markets ended lower, awaiting US payrolls data. However, European markets made a positive opening. Back home, weakness in Indian rupee too weighed down sentiments. Meanwhile, stocks related to auto space tumbled on profit-booking after two consecutive sessions of gains. On the flip side, shares of real estate companies remained in demand on back of heavy volumes in otherwise weak market. Housing Development and Infrastructure (HDIL), Ajmera Realty, Kolte Patil Developers, Unitech, Indiabulls Real Estate, D B Realty, Prestige Estates, Anant Raj, DLF, Oberoi Realty and Sobha Developers all edged higher in the day’s trade. Additionally, shares in sugar manufacturer continued their northward moment after the India Ratings revised its FY15 outlook on the sector and the companies within the sector to 'negative to stable' from negative. Finally, the BSE Sensex plunged by 149.57 points or 0.66%, to settle at 22359.50, while the CNX Nifty lost 41.75 points or 0.62% to settle at 6,694.35.

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Indian markets to extend their weakness with a soft start

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