Markets to make a cautious start of the new week and month

The Indian markets despite some good moves ended marginally in red in last session. Today, the start is likely to remain cautious and traders may react to the subdued GDP data announced after the market hours on Friday. India’s economic growth remained below the 5 percent mark for the second year in a row at 4.7 percent in 2013-14.  Growth remained subdued at 4.6 percent in the fourth quarter of 2013-14 too, mainly due to a decline in manufacturing and mining output. Traders may also remain cautious ahead of the Reserve Bank of India (RBI) monetary policy on Tuesday, its first exercise after the installation of the new union government. Though, the RBI is likely to keep rates unchanged as the governor Raghuram Rajan has said that government and the central bank have both stressed on the need to bring down inflation. Today, the auto sector will keep buzzing with the monthly sales numbers and some scrip specific action will be there, based on the performance with HeroMoto Corp and M&M reporting good numbers. There will be some buzz in the PSU oil marketing companies on report that after the latest hike in diesel prices, losses on sale of diesel have dipped to a new low of Rs 2.80 per litre, the new government on Saturday allowed oil companies to raise rates by 50 paisa a litre.

The US markets ended modestly higher in last session, snapping one of the best months of the year so far. Though, the economic news was mixed but traders concentrated on some deal news and added positions. The Asian markets have mostly made a green start taking cues from a report that China’s manufacturing expanded at the fastest pace this year, while authorities reduced some lenders’ reserve requirement ratios as the government acts to support growth in the world’s second-biggest economy.

Back home, Extending their southward journey for second day in a row, Indian equity indices ended the session slightly in the red on Friday, as investors preferred to remain on sidelines ahead of Q4 GDP data, scheduled to be released later in the day. Moreover, investors were also eying RBI policy review next week, wherein Raghuram Rajan is most likely to keep monetary policy rates steady, given continued concerns about inflation. Frontline gauges moved in a narrow range for the major part of the day with bouts of volatility witnessed during the trade. Earlier, markets made a positive start tracking positive global cues from US markets but sentiments turned cautious on report that foreign institutional investors (FIIs) sold shares worth a net Rs 522.90 crore on May 29, 2014, as per provisional data from the stock exchanges. Moreover, disappointing cues from European market too dampened investors’ sentiments. Asian markets too, reversing all on their initial gains ended mostly in the red. Back home, Reserve Bank of India (RBI) Governor Raghuram Rajan said he expected to join hands with the country’s new government to bring down dangerously high inflation. Rajan, speaking at a seminar in Tokyo, said the new government’s plan to curb food inflation seems sensible and that he expects the public’s inflation expectations to fall in the future. On the currency front, the rupee was trading little changed at 59.01/02 at the time of equity markets closing versus its previous close of 59.03/04, as good dollar selling from the share sale of Yes Bank was offset by heavy demand from importers to meet month-end import commitments. Meanwhile, the rate-sensitive Banking counter witnessed selling ahead of the credit policy next week. Finally, the BSE Sensex declined by 16.81 points or 0.07%, to 24217.34, while the CNX Nifty was down by 5.70 points or 0.08%, to 7,229.95.