Markets to extend the somberness with a cautious start

The Indian markets suffered another setback in last session when major indices after a positive start could not keep up the pace and ended with cut of around half a percent. Today, the start of the new week is likely to remain somber on soft global cues; traders will be eyeing the Delhi state assembly elections results scheduled to be declared tomorrow. Now all attention will divert to the mega event of the year, ‘Union Budget’. Industry body, Confederation of Indian Industry (CII), in its Budget wish list, urged the government to avoid the temptation of raising excise duties for the success of 'Make in India' programme, as manufacturing demand is still week and high excise duties could affect demand. There will be buzz in the markets with Sebi deciding to suspend trading in listed companies that are found to be evading taxes and laundering black money. The capital markets regulator has identified three parameters for taking action against such companies and the trading would be suspended in the shares of those entities that satisfies more than one of the criteria. There will be some buzz in the banking stocks, as a liquidity mismatch in the banking system prompted the RBI to offer a two-day window to banks to tide over the situation. PSU sector too will see some action with government paving the way for Rs 15,000 crore ONGC sell-off.

The US markets ended in red with traders ignoring the good jobs data. The jobs report altered market expectations for rate rises from the Fed with many now expecting the Fed to raise rates in the early summer. The Asian markets have made mostly a soft start, as Chinese trade figures showed signs of weakness in the region’s biggest economy. Though, the Japanese market was trading marginally higher on a weaker yen.

Back home, Indian equity benchmarks once again ended the Friday’s session in the red, extending their southward journey for sixth straight session amid weak global cues. After trading flat till noon deals, benchmarks slipped in red terrain in last leg of trade as investors opted to square-off their positions in riskier assets ahead of the US jobs and wages data due to be released later in the day for further clues as to when the Federal Reserve might raise interest rates. Sentiments remained down-beat on reports that foreign portfolio investors sold shares worth a net Rs 27.43 crore on February 5, 2015, as per provisional data. Moreover, the Delhi assembly polls on February 7 are likely to dictate the trend on the bourses on Monday as market participants stayed wary of the outcome. However, losses remained limited as some support came in with an HSBC report that India’s manufacturing and services sectors expanded at a faster pace than China in January. Among the four largest emerging economies, HSBC said that only India bucked the trend and recorded one of the fastest growth in January. Meanwhile, as a measure to incentivise long term investors, the Reserve Bank of India (RBI) allowed foreign portfolio investors (FPIs) to invest in government securities the coupons received on their existing investments in government securities. Global cues remained sluggish with European markets making a negative start, while Asian markets ended mostly in the red. Back home, depreciation in Indian rupee too dampened the sentiments. The rupee fell by three paise to 61.76 at the time of equity markets closing on fresh dollar demand from banks and importers. Meanwhile, shares of public sector oil marketing companies (OMCs) edged lower after global crude oil prices rebounded. On the flip side, stocks related to software and technology counters edged higher as Cognizant Technologies Solutions Corp posted robust revenue growth forecast for 2015. Cognizant forecast 2015 revenue growth of at least 19 per cent after growing at just 16 per cent in 2014. Finally, the BSE Sensex declined by 133.06 points or 0.46% to 28717.91, while the CNX Nifty dropped 50.65 points or 0.58% to 8661.05.