Markets to remain cautious lacking any supportive cue

The Indian markets continued their somberness and despite a positive start could not keep up the pace and succumbed to last hour profit taking. Today, the start is likely to remain cautious as the global cues are not very supportive. Traders will be concerned with RBI Governor Raghuram Rajan's statement that inflation is still a concern for the central bank and the monetary policy continues being “conventional”. He also clarified that the mid-policy action was also to assuage the concerns of some people, who were calling RBI as “tardy” in its policy formulating. There will be buzz in the aspirants of Payments bank and Small Finance Banks with RBI announcing and putting out names of applicants on its website. For Payments Banks it got 41 applications and for Small Finance Banks it received 72 applications. Aviation stocks too will be in action on reports that Aviation Ministry is hopeful of coming out with a new policy next week with a focus to make the country an international hub for air transport. There will be lots of result reaction and announcements to keep the markets in action.

The US markets made a mixed closing in last session amid choppy trade. Major averages showed a lack of direction throughout the day weighed down by a sharp drop in the price of crude oil and private sector report showing a weaker than expected private sector job growth in the month of January. The Asian markets have made mostly a soft start, though the Chinese market was trading in green after People’s Bank of China announced lowering lenders’ reserve ratio by 50 basis points, a move that will inject about 600 billion yuan into the economy.

Back home, Wednesday turned out to be a disappointing session for the Indian equity indices which got pounded by around half a percent, extending their southward journey for fourth straight session. After a positive opening, the domestic bourses traded choppy for most part of the session but, sharp decline in late trade dragged key gauges below their crucial 28,900 (Sensex) and 8,750 (Nifty) levels. Sentiments turned pessimistic in last leg of trade after Reserve Bank of India’s (RBI) Governor Raghuram Rajan said that inflation was still a concern but added the deflationary global environment gave the central bank some elbow room with monetary policy. However, losses remained capped after the HSBC India Services PMI Business Activity Index-tracking changes in activity at Indian services companies on a month-by-month basis, came at 52.4 in January, up from 51.1 in December, signaling a solid expansion in business activity. Some support also came with 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-focused 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. On the global front, European markets made an awful start, while the Asian markets ended mostly in the green. Back home, depreciation in Indian rupee too dampened the sentiments. The rupee was at 61.74 per dollar at the time of equity markets closing as compared to 61.67 per dollar level on Tuesday. Sentiments also remained down-beat on report that foreign institutional investors continued to remain net sellers to the tune of Rs 264 crore on February 3, as per provisional stock exchange data. Meanwhile, banking shares extended losses for the second straight session after Raghuram Rajan decided to leave repo rate unchanged at its credit policy meet on January 3, 2015. Finally, the BSE Sensex plunged by 117.03 points or 0.40%, to 28883.11, while the CNX Nifty dropped by 32.85 points or 0.38% to 8,723.70.