Markets likely to get a bounce back on good global cues

The Indian markets lost their way in second half after making a good start in last session. RBI maintaining a status quo after its last fortnight rate cut, disappointed some another rate cut hopefuls and some profit booking was witnessed in final hours. Today, the start is likely to be in green and markets to recover, taking cues from the global markets. Traders will also be taking cues from the statement of Prime Minister Narendra Modi, who pitching India growth story before global investors has promised them a fair, predictable and consistent tax system and growth-focussed economic policies. The Reserve Bank on its part has decided to liberalise FDI norms by allowing greater flexibility in the pricing of instruments with a view to attract more investments from overseas. There will be some buzz from metal and mining stocks, as the government received a total of 176 preliminary bids for 23 coal blocks on offer in the first tranche of the ongoing auction. The PSU oil marketing companies too will be in action after petrol and diesel prices were reduced again, as the rout in the global oil market triggered the tenth cut in fuel rates since August. Also, negotiations are still going on with LPG tanker strike. LPG Transport Owners Association wants Rs. 3.09 per tonne per km from the three oil companies. But they agreed to Rs. 2.94 per tonne per km. There are lots of important result announcements lined up too, to keep the markets in action.

The US markets rallied in last session supported by upbeat auto sales data and some merger acquisition news. Spike in price of crude oil for the third consecutive session too supported the upmove. The Asian markets have mostly made a positive start, though the China’s services industry expanded at the weakest pace in six months, driven by a moderation in the rate of growth in new work in January.

Back home, extending their southward journey for third straight day, Indian equity benchmarks ended the volatile day of trade with a cut of around half a percent, dragged down by selling in rate-sensitive counters such as real estate and banking after the central bank kept the policy rates unchanged, while some weak corporate earnings also dampened the sentiment. After a positive opening, markets pared all their gains and entered into negative terrain post Reserve Bank of India’s (RBI) monetary Policy announcement. Though, losses remained capped as 29,000 and 8,750 proved to be the strong support levels for Sensex and Nifty, respectively. Overall sentiments remained down-beat after the RBI held the interest rates steady at 7.75 per cent after easing the monetary policy just three weeks ago; leaving its next move probably until after the government presents its annual budget at the end of this month. However, RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.0% to 21.5% of their NDTL with effect from the fortnight beginning February 7, 2015. Sentiment also took a hit after the index of eight core sectors, which contribute to 38% of the industrial production slowed to three month low of 2.4% in December from 6.7% in November 2014. Major drag came from slowdown in steel output, which occupies 6.88% in the overall index. The index declined by 2.4% in December, 2014. On the global front, European markets made a firm start, while Asian markets too ended mostly in the green. Back home, sentiments remained dampened on reports that overseas investors sold Indian shares worth Rs. 630 crore on February 2, 2015, after buying $2.9 billion so far this year and 11 continuous days of buying, provisional exchange and regulatory data showed. Disappointing set of Q3 earning from PNB too dampened the sentiments. Shares of Punjab National Bank tanked over 7% after the bank’s gross NPAs as a percentage to total advances rose to 5.97% from 4.96% in the same quarter a year ago. Finally, the BSE Sensex plunged by 122.13 points or 0.42%, to 29,000.14, while the CNX Nifty dropped by 40.85 points or 0.46% to 8,756.55.