Markets to make a soft-to-cautious start tailing weak global cues

The Indian markets ended the dismal week on a flat note on the last trading session and today the start is likely to remain a bit sluggish tailing weakness in other global markets. Traders apart from the global issues will remain concerned about the domestic factors, as it has been reported that latest estimates worked out by the Planning Commission expects that the Indian economy's annual average growth rate may not exceed 6 percent during the 12th Five-Year Plan (2012-17), compared with the target of 8 percent. There will be some buzz in the banking sector, as the Confederation of Indian Industry (CII) to address the issue of Non-Performing Assets (NPAs) has recommended a five point agenda to the Finance Ministry and the Reserve Bank of India (RBI). The plan focuses upon, revamping the corporate debt restructuring (CDR) mechanism, creating a special resolution mechanism for the infrastructure sector, setting up of a national asset management company, liberalising norms to increase capitalisation of asset reconstruction companies, and improving the effectiveness of the insolvency regime and implementation of legal framework. However, some consolidation and upmove can be seen too, with a Finance Ministry report allaying fears of withdrawal of fiscal stimulus programme in the US has said that the country is an attractive destination on its own and has remained the third most preferred nation for FDI since 2010.

There will be lots of important result announcements too, to keep the markets buzzing. Ajanta Pharma, Canara Bank, Eveready Inds, IL&FS Invest Mgrs, Pantaloons and United Bank will be announcing their numbers.

The US markets closed modestly in red in last session despite a good a jobs data, as the traders remained concerned about the brewing tension in Ukraine. The Asian markets have made mostly a soft start, though some of the indices are closed for trade today, sentiment in the region are weighed down by report of a gauge of Chinese manufacturing contracting for a fourth month. HSBC/Markit gauge of China manufacturing dropped to 48.1 from a preliminary reading of 48.3.

Back home, Friday’s trading session turned out to be a disappointing session of trade for the Indian equity markets, as market participants booked their entire initial gains amid disappointing macro data. Sentiments also remained cautious over escalating tensions in Ukraine and looming US April jobs data slated to be released later in the day. Earlier, domestic bourses made a positive start as sentiments remained jubilant on report that foreign institutional investors (FIIs) bought shares worth a net Rs 454.48 crore on April 30, 2014, as per provisional data from the stock exchanges. Afterwards markets started crawling southward and entered into red as sentiments turned somber after data released showed that manufacturing activity remained stagnant in April in world’s third biggest economy. The HSBC India Manufacturing Purchasing Managers’ Index (PMI), a measure of factory production, which is based on data from monthly survey of  purchasing executives in over 500 manufacturing companies, stood at 51.3 in April, unchanged from the level in March. Sentiments also remained dampened after the output growth of eight core industries slowed down to 2.5% in the month of March from a year earlier, against 4.5% in February and 7% recorded in the same month of previous year on account of poor production of crude oil, natural gas and fertiliser sectors. Core industries’ cumulative growth slowed to 2.6% during FY14 from 6.5% in FY13. Weak opening in European counters weighed on sentiments. Also, Asian markets concluded Friday’s trade mostly in red. Back home, selling in auto space too dampened the sentiments, as Maruti Suzuki and M&M reported disappointing April sales numbers. Maruti Suzuki plunged over a percent on reporting 11.4% fall in total sales at 86,196 units in April 2014, against 97,302 units in the same month last year, while M&M reported its auto sales numbers which stood at 36,274 units during April, 2014. The Passenger Vehicles segment sold 18,148 units in April, 2014, as against 20,748 units during April 2013. Although, TVS Motors Company gained over 6% on reporting 15% rise in April sales, the gains were little to heave the entire pivotal higher. Finally, the BSE Sensex declined by 13.91 points or 0.06%, to 22403.89, while the CNX Nifty was down by 1.60 points or 0.02% to 6,694.80.