Markets to make a cautious but positive start

The Indian markets could not keep their initial momentum going in last session and despite a good recovery in final hours, ended modestly lower. Today, the start is likely to remain cautious but a mildly positive start can be expected and with the announcement of budget dates there will be lots of buzz in the market. Meanwhile, government has set deadlines for inter-ministerial consultation on Cabinet and Cabinet Committee notes, in order to expedite the decision making process. The Reserve Bank of India has released timelines for regulatory approvals and a citizens’ charter for delivery of services as part of implementation of the non-legislative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC). Sugar sector stocks will keep buzzing on announcement of a series of measures for the sugar industry, including an increase in the import duty from 15% to 40%, to improve its financial health. Textile stocks too will be in action as Union Textiles Minister Santosh Kumar Gangwar has said that textile exports are set to touch $50-billion mark in the current fiscal.

The US markets ended almost flat in last session, though the trade remained choppy and reflected uncertainty about the near-term outlook for the markets. Traders largely shrugged off the report of bigger than expected increase in US existing home sales in the month of May. The Asian markets have mostly made a positive start, though the Japanese and Chinese markets were marginally in red on decline in consumer and industrial shares.

Back home, extending their southward journey for fourth day in a row, Indian equity benchmarks ended Monday’s trade in the red as sentiments remained dampened by report that foreign direct investment (FDI) in India declined by 26 percent to five-month low at $1.70 billion in the month of April as compared to $2.32 billion in the same month of previous year. After opening on a positive note, the frontline gauges failed to build momentum and entered into red terrain. The indices even went on to test important psychological 24,900 (Sensex) and 7,450 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their losses from thereon as investors continued hunt for fundamentally strong stocks. Some support also came on report that the government is likely to defer implementation of the controversial GAAR provisions by one more year to April 2017 and exempt transactions made up to March 2013 in a bid to improve business sentiment. Global cues too remained dampened as European markets made a sluggish opening, while the Asian markets too ended the session mostly in the red terrain. Back home, decline in fast moving consumer goods counter mainly dampened the sentiments, led by ITC, which slumped over 6.50% on worries that government may raise taxes on cigarettes aggressively in the upcoming budget in July. Additionally, cement stocks declined after the government on Friday pushed through a steep 6.5 percent hike in rail freight effective June 25. On the flip side, metal shares remained on buyers’ radar on hopes of better demand after a preliminary HSBC survey showed activity in China’s factory sector expanded in June for the first time in six months as new orders surged. Finally, the BSE Sensex plunged by 74.19 points or 0.30%, to 25031.32, while the CNX Nifty declined by 18.10 points or 0.24%, to 7,493.35.