Markets to make a cautious start eyeing Railway budget and F&O expiry

The Indian markets losing all their early gains made a flat closing in the last session. Today, the crucial day of twin mega events of Railways Budget and F&O series expiry is likely to be cautious. While, the F&O expiry is likely to turn volatile in the last hours of trade, Union minister Suresh Prabhu will be presenting his maiden railway budget and traders will be eyeing the reform measures and actions for completing different initiatives announced by him recently. Prabhu has said that best efforts are being made to fulfill people's aspiration in the NDA government's first full-fledged Rail Budget. There will be some buzz in the power companies, especially the solar energy firms after the government approved setting up of 15,000 MW grid-connected solar power projects through state-run NTPC under the National Solar Mission. Meanwhile, the steel stocks too will see some action after the rating agency Moody's Investor Services said that steel demand in India will grow in single digit in 2015 buoyed by government's infrastructure spending. There will be some buzz in the oil & gas stocks too, as the Oil regulator PNGRB has suggested a maximum marketing margin on natural gas sold to fertilizer and LPG plants of about 11.5 cents, less than what state-run GAIL and Reliance Industries currently charge from gas users.

The US markets made a mixed closing in last session after a choppy trade, as traders seemed reluctant to make any significant moves following the upward trend seen over the past several weeks. Though, the US new home sales came in well above estimates in the month of January. The Asian markets are trading mostly in red, coming off their positive start, though the Japanese market was trading at its fresh 15 years high on yen’s weakness.

Back home, Wednesday was a day of disappointment for the Indian markets, when the major indices after making a solid start and retaining the good momentum till last, succumbed to profit booking in the final hours, giving up all their gains and ending flat with just a positive bias. The broader markets too suffered the similar fate and lost all their gains to end with a quarter percent of loss. While, partially the volatility was due the F&O expiry scheduled tomorrow, it was also due to the cautiousness ahead of the railway budget and the growing opposition to the proposed amendments to the land acquisition law. Opposition parties, along with some allies of the government, as well as activists like Anna Hazare, claim this proposed dilution of the law would make farmers vulnerable to hostile takeover of their land by corporates. The local markets which drew cues from the good going in the global markets, completely lost their momentum in last. The Asian markets too ended mostly in the green despite some choppiness, while the European markets after making a positive start turned lower. Back home, major bourses gave up all their gains in last and the journey that looked as a prelude to the budget rally turned into a day of disillusionment.  All the early excitement generated by the dovish comment of the Fed chief and with the report of the Fourteenth Finance Commission which though suggested a fiscal deficit target of 3.6 percent of GDP in 2015-16 and 3 percent in the subsequent years on the back of likely pick-up in economic growth, also recommended greater devolution of financial resources to the states. 42 percent of gross tax revenue will be devolved to states. There was a bit of cautiousness with global rating agency Moody’s Investors Service, just ahead of the budget stating that its assessment of India’s credit ratings will be determined mainly by the extent of its fiscal reforms, not recent revisions to its economic growth data. On the sectoral front, by the end the majority was of the decliners with some indices losing all their gains in final moments. Healthcare, banking, capital goods and metal finally ended with cut of over half a percent on the BSE. There was some cheer in the IT sector,one of the top gainers of the day, after the US announced that it will provide work permits to spouses of H-1B visa holders beginning May 26. Power stocks on the other hand remained under pressure, after World Bank in a report asked banks to pull up their socks and critically look at every loan proposal from power sector firms. Finally, the BSE Sensex gained 3.33 points or 0.01% to 29007.99, while the CNX Nifty ended higher by 5.15 points or 0.06% to 8767.25.