Markets likely to get a flat-to-cautious start

The Indian markets despite witnessing a sudden drop in last hours managed a close in green with gains of over half a percent on Friday, surge in rate sensitives’ along with some good result announcements took the markets higher. Today, the start is likely to be flat to cautious, in early trade Reliance industries is likely to put some pressure on the markets as the company has reported its first quarterly profit drop in more than two years, though it announced a share buyback of up to Rs 10,440 crore that may work in favour and help the stocks after initial jitters. There will be buzz in the markets with the latest SEBI’s additional controls for initial public offers (IPOs) and relisted scrips to curb excessive volatility on the listing day. The market regulator has extended the call auction mechanism for price discovery to IPOs and relisted scrips, apart from placing price bands during the normal trading session on the first day of trading. Currently, the call auction mechanism is applicable only to Sensex and Nifty stocks. As per the new norms, during the call auction which would take place from 9 am to 10 am, the first 45 minutes shall be allowed for order entry, order modification and order cancellation. Subsequent 10 minutes would be for order matching and trade confirmation and the remaining five minutes shall be the buffer period. The normal trading session on the listing day would take place subsequent to conclusion of the one-hour ‘call auction’ session for scrips on the BSE and the NSE. On the same time there will be some soothing impact of Vodafone case on the FII’s as it would encourage foreign investment in the country. Vodafone Group Plc (won a $2.2 billion legal battle against the tax department in a Supreme Court. There will be some expiry related volatility too; while there will be lots of result announcements to keep the markets buzzing. Colgate Palmolive, Federal Bank, Gail India, Idea Cellular, L&T, Maruti Suzuki, Sterlite Inds and Torrent Pharma will be among the many to announce their numbers today.

The US markets closed mixed on last trading day of the week on the back of mixed earnings number and eyeing the talks between Greece and its lenders. In Asia most of the markets are closed today, though those who are trading, are marginally in green. Japanese markets are up for the fifth day in a row as US home sales rose to the highest level in almost a year, overlooking Greece’s struggle to reach a deal with creditors to ease its debt burden. European finance ministers will meet early this week and Greece’s debt negotiations are likely to be high on the agenda.

Back home, Indian frontline equity indices managed to escape the wild swings in the dying hours of trade unaffected as they finished the session with over half a percent gains. Just when it appeared that the benchmarks will conclude another positive session with good gains, hefty bouts of selling emerged abruptly in the last leg of trade which dragged the key gauges to the lowest point in the session. However, the selling pressure was countered immediately before the close of session and the bulls had the last say as they stalled the declining momentum of the benchmarks and took the key indices to the highest point in the session. Index heavyweight Reliance Industries led the late recovery for the markets as it bounced back to end with over a percent gains ahead of its third quarter earnings announcement. After the previous sessions over a percent rally in the markets, investors chose to indulge in stock specific activity amid a slew of earnings announcements by heavyweight companies. One of IT heavyweights Wipro reported better than expected earnings for the December quarter and got commended for the performance by investors. However, FMCG bellwether ITC reported its third quarter earnings which were largely in line with street’s expectations but got punished by marketmen. Meanwhile the rate sensitive banking stocks witnessed heavy buying interests a day after the pre-budget meeting of Banking and Financial Institutions’ representatives and Union Finance Minister, where Pranab Mukherjee called for united efforts towards strengthening India’s economy. Leads from the Asian peers too remained impressive as most markets in the region traded in the positive terrain. Earlier on Dalal Street, the benchmark got off to an encouraging opening tracking the impressive leads from Asian markets tailing encouraging performance from the US. Thereafter, the bourses remained in fine fettle through the first half. But in second half the optimism in the markets showed signs of petering out in the mid noon trades as sudden selling pressure dragged the bourses into the negative terrain. However, the resilient indices did not capitulate to the extreme volatility and rebounded to touch the highest levels in the day. On the BSE sectoral space, rate sensitive Banking counter remained the top gainer in the space with strong gains of over three and half a percent while the Consumer Durable sector too gained a lot of traction and settled with over two percent gains. On the flipside, the defensive - FMCG counters remained the top laggard with over two percent cuts mainly due to the sharp plunge in heavyweight ITC post announcing its quarterly numbers. Finally, the BSE Sensex rose 95.27 points or 0.57% to settle at 16,739.01, while the S&P CNX Nifty up by 30.20 points or 0.60% to close at 5,048.60.