Markets to make a cautious start after last session’s upmove

The Indian markets despite a volatile session managed a close in green in last session and the major indices gained around half a percent with traders overlooking the Delhi assembly election results. Today, the start is likely to be flat-to-cautious,now all the focus will shift on budget and before that lots of macro data announcements. Meanwhile, traders will be concerned about economists saying that the new methodology pushing up the GDP forecast to 7.4 percent for the current fiscal is not in sync with key parameters such as tax collections and credit growth. Based on the new series, the Central Statistics Office has projected an economic growth rate of 7.4 percent for 2014-15, up from 6.9 percent a year ago. However, there will be some support with law minister Sadananda Gowda’s statement that India plans to amend its arbitration law, setting time limits for courts and easing judicial rules to decide corporate disputes, as it seeks to attract more foreign investment. There will be buzz in the IT sector with industry body Nasscom forecasting that the industry growth in the coming financial year would be about the same as in the current one. The association has said that the growth would be 13% in 2014-15, and would be between 12% and 14% in the coming year.

The US markets bounced back and ended higher in last session on hopes that Greek debt negotiations could result in a deal that will provide stabilization in Europe, although a drop in oil prices limited the advance. The Asian markets have made a cautious start as concern about corporate earnings offset optimism that a compromise will be reached over Greece’s debt crisis, while the Japanese market remained closed.

Back home, snapping seven day losing streak, Indian equity benchmarks ended the volatile session of trade with a gain of around half a percent. After trading firmly for most part of the session, key gauges entered into the red terrain in last leg of trade, as investors booked profit at higher levels, however instant recovery was witnessed and markets moved higher once again in dying hour to end-up into green. Sentiments remained up-beat on sustained buying by funds and retail investors, after the government’s projection of economy to grow at a faster pace of 7.4 per cent in the current fiscal as against 6.9 per cent in 2013-14. 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. 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. Further, Indian corporate leaders have welcomed the landslide victory of the Aam Admi Party in New Delhi and said that the change will lead to good governance. Indian corporate CEOs are hoping that the new Chief Minister will abandon confrontationist approach towards the corporates and make it easier for companies to do business in the capital city. On the global front, European markets traded in the green in early deals on Tuesday, while the Asian equities indices ended mostly in the red. Back home, appreciation in Indian rupee too supported the sentiments. Meanwhile, rally in auto counter too supported the sentiments after Society of Indian Automobile Manufacturers (SIAM) reported that domestic passenger car sales increased 3.14% to 1,69,300 units in January 2015, while two-wheeler sales in January rose 1.07% to 13,27,957 units. Vehicle sales across categories registered an increase of 1.66% to 16,50,382 units from 16,23,429 units in January 2014. Additionally, banking stockstoo remained on buyers’ radar after the Government announced infusion of Rs 6,900 crore in nine public sector banks. This additional capital has been given on the basis of new criteria that comprise of efficiency parameters. Finally, the BSE Sensex surged by 128.23 points or 0.45% to 28355.62, while the CNX Nifty gained 39.20 points or 0.46% to 8565.55.