Markets to make soft start tailing weak global cues

The Indian markets crashed like house of card in last session as investors booked profit at higher levels ahead of RBI policy meeting on February 3. Today, the start is likely to be on a soft side tracking weak global cues. Also, investors may remain worried over a huge shortfall in tax deducted at source (TDS) collections, the Central Board of Direct Taxes (CBDT) has asked the income tax department (I-T) to initiate special measures to achieve the collection target for this fnancial year. However, traders will be getting some support from report that overseas investors pumped in a staggering Rs 33,688 crore in capital markets last month, making it the highest investment in six months owing to easing inflation and rate cut by Reserve Bank of India (RBI). There will be some action in the steel sector stocks, as the Centre said it would pump Rs 1,50,000 crore for building four steel plants of 20-24 million tonnes combined capacity, in collaboration with the governments in four states. The aviation stocks too may see some action as Jet fuel prices have been cut by 11.3 per cent bringing further relief to domestic airlines. In Delhi, the price of aviation turbine has been cut from Rs 52,423 a kilolitre to Rs 46,513 a kilolitre.

There will be lots of important result announcements that will keep the markets in action. Cummins India, DCM Shriram Industries, GIC Housing Finance, Indian Bank, Redington (India), Religare Enterprises, UPL etc will report their numbers today.

The US markets once again turned lower in last session on getting some disappointing economic data and earnings announcements. The Asian markets have made mostly a soft start after weekend Chinese data raised concerns about growth in the world’s second-largest economy. The Chinese official Purchasing Managers’ Index (PMI) fell to 49.8 in January, a low last seen in September 2012 and below the 50-point level that separates growth from contraction on a monthly basis.

Friday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 9,850 (Nifty) and 29,200 (Sensex) levels as investors booked profit off the table amid Chinese growth concern gripped the markets. Selling was both brutal and wide-based as none of sectoral indices, barring realty, power and software, on BSE were spared. Counters, which featured in the list of worst performers, include banking, consumer durables, public sector undertaking and metal. Markets, after hitting fresh peaks in early deals, witnessed bout of selling pressure as investors booked profit at higher levels ahead of RBI policy meeting on February 3. Though, Street widely expects Central bank to pause during the February 2015 monetary policy review, while maintaining a dovish tone, and resume cutting the repo rate by a further 50 basis points (bps) after the presentation of the Union Budget. Lower than expected corporate earnings posted by blue chip companies such as Dr Reddy’s Lab, ICICI Bank and HDFC Bank also weighed on the bourses. Moreover, market participants failed to draw any sense of relief with UN report stating that, notwithstanding the decline in global foreign direct investment inflows, India’s FDI increased by 26 percent in 2014 to an estimated $35 billion with maximum growth in the services sector. Selling got intensified after European markets made negative start, Asian markets too ended mostly in the red. Back home, investors failed to draw any solace from report that foreign institutional investors were net buyers in Indian equities worth Rs 1,723.77 crore on January 29, 2015, as per provisional stock exchange data. Depreciation in rupee too dampened the sentiments. Stocks related to financial space witnessed selling pressure on the back of PSU banking major Bank of Baroda (BOB) and ICICI Bank’s disappointing third quarter earnings. Finally, the BSE Sensex plunged by 498.82 points or 1.68%, to 29182.95, while the CNX Nifty dropped by 143.45 points or 1.60% to 8,808.90.