Markets to remain cautious eyeing the Delhi poll results

The Indian markets suffered sharp plunge in the last session and the major indices lost over one and half a percent for the day. Apart from the global worries, impact of probable Delhi assembly election outcome was felt on the street. Today, the start is likely to remain cautious following the weakness in the global markets and traders will be eyeing the Delhi poll results, which is likely to see AAP coming to power again. Market participants will also be reacting to the statistics office release of advanced Gross Domestic Product (GDP) estimate, according to which the economy is poised to grow 7.4% in the current year, bettering 6.9% recorded last year. According to the latest revised GDP numbers, based on the new gross value added (GVA) methodology, Indian economy grew at a much faster pace of 6.9 per cent in fiscal year 2014, compared with 4.7 per cent using the old method. In the third quarter ending December, the economy grew at 7.5 per cent, tad lesser than the second quarter growth of 8.2 percent. Meanwhile, Finance Minister Arun Jaitley has said that the government will make efforts to keep fiscal deficit within the targeted limit even as investments remain a challenge. There will be buzz in the power sector stocks, as a Parliamentary panel has sought suggestions on the proposed changes to the Electricity Act which seeks to provide choice of power suppliers to consumers and propel growth in the sector. Also there will be lots of result announcements to keep the markets in action.

The US markets ended lower in last session on renewed concerns about the situation in Greece; with the losses on the day, the major averages slid back into negative territory for the New Year. The Asian markets have made a mixed start and some indices were trading in red as fears of a Greek debt default and exit from the eurozone escalated.

Back home, Monday turned out to be another disappointing session for the Indian equity indices which got pounded by over one and a half percentage point, as investors sold stocks across sectors amid sluggish global cues. After a negative opening, the domestic bourses never looked in recovery mood and extended the losing streak to seventh day in a row, breaching their crucial support levels of 28,300 (Sensex) and 8,550 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included capital goods metal and realty. Sentiments remained dampened on reports that foreign portfolio investors sold shares worth a net Rs 96.45 crore on February 7, 2015, as per provisional data. Moreover, there were worries of exit polls predicting an AAP win in the Delhi assembly elections. Though, it would do little to change national political scenario but its leader Arvind Kejriwal’s rhetoric against big business is raising fear in the markets. Investors remained on sidelines ahead of index of industrial production (IIP) data for December 2014 on February 12, 2015. On the same day, the government will release data for the annual rate of inflation based on the combined consumer price index (CPI) for urban and rural India in January 2015. Selling got intensified after European markets made a sluggish start, while Asian markets too ended mostly in the red. Back home, depreciation in Indian rupee too dampened the sentiments. Meanwhile, power stocks succumbed to selling pressure, with Tata Power losing 2.5% on fears that AAP may again lower power tariffs in Delhi like it did in its earlier stint. Metal stocks too edged lower, tracking international prices after a surprisingly weak Chinese import data fuelled worries that economic growth may be more fragile than anticipated. Additionally, public sector oil marketing companies (OMCs) BPCL, HPCL and IOC edged lower as global crude oil prices edged higher and as the rupee edged lower against the dollar. Finally, the BSE Sensex declined by 490.52 points or 1.71% to 28227.39, while the CNX Nifty dropped 134.70 points or 1.56% to 8526.35.