Markets to get a cautious start; recovery can be expected in latter trade

The Indian markets went through a disappointing trade in last session with major indices succumbing to profit booking after surging to their record highs in early trade. There was sudden and across the board sell off in final hours that dragged the markets lower. Today, the start is likely to remain cautious, however some recovery can be expected before going for an extended weekend and Nifty can reclaim its 8950 levels. Meanwhile, the government has stated that the Gross Domestic Product will remain a comprehensive measure to capture changes in the economic activity and it will not be replaced by Gross Value Addition (GVA). The telecom stocks will keep buzzing, as the biggest ever auction of 2G and 3G airwaves began on a high note with operators making bids worth an estimated Rs 60,000 crore after six rounds of bidding in all four bands. However, the government will not release results of the auction because of a court ruling. Infra stocks too are likely to see some action, as the Prime Minister Narendra Modi has suggested that additional funds and resources at the disposal of states should be directed primarily towards nation building.

The US markets continued their bearish trend and ended lower once again in last session after ADP said private sector employment increased by 212,000 jobs in February compared to an upwardly revised jump of 250,000 jobs in January. The Asian markets are mostly in red led by the Chinese market after the country's leaders cut the annual growth target to 7 per cent for 2015, down from 7.5 per cent last year and lowest in last 11 years.

Back home, Wednesday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 8,950 (Nifty) and 29,400 (Sensex) levels as rate cut euphoria fizzled out in later trade. Initially, markets made a gap-up opening as Reserve Bank of India (RBI) surprised the markets with an early post-budget repo rate cut of 25 bps (basis points) to 7.5% from 7.75% which was again outside of central bank’s scheduled policy review meetings as the earlier rate cut effected on January 15. Sentiments also remained jubilant on reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 772.92 crore on March 3, 2015, as per provisional data. Some support also came after services sector expanded rapidly in February at the fastest growth rate in eight months on the back of significant rise in new business orders even as jobs fell marginally in the sector. Indicating a robust expansion across the sector, HSBC India Services Business Activity Index, which tracks changes in activity at Indian services companies on a monthly basis, rose to an eight-month high of 53.9 in February as against 52.4 in the previous month. However, the markets lost ground in late noon deals with the benchmark indices failing to sustain at higher levels as investors opted to book profit after markets hitting historic highs of 30,000 (Sensex) and 9,100 (Nifty) levels. On the global front, European markets traded mostly in the red in early deals, while Asian markets ended mostly in the red. Back home, depreciation in Indian rupee too dampened the sentiments. Some concern came with Chief Economic Adviser Arvind Subramanian’s statement that the ambitious 8.1-8.5 percent economic growth projected for the next fiscal in Finance Minister Arun Jaitley's Budget is more like a 'statistical and not a real number’. Meanwhile, banking stocks came under pressure during late noon trades as traders booked profits at higher levels. However, RBI rate cut may encourage large lenders to cut their lending rates boosting demand for home and auto loans and provide funds for various stalled and new projects. Finally, the BSE Sensex plunged by 213.00 points or 0.72% to 29380.73, while the CNX Nifty dropped by 73.60 points or 0.82% to 8,922.65.