Markets to get a flat-to-cautious start; WPI inflation data eyed

The Indian markets suffered sharp sell-off in last session and both the major indices dropped around one and half a percent. Today, the start is likely to be flat-to-cautious and some recovery can be expected in latter trade, though marketmen will be eyeing the wholesale price index data for the month of February 2015, scheduled to be released later in the day. Foreign investors will be getting some encouragement with Finance Minister Arun Jaitley’s statement that the government was rationalising the country's tax system to make it fair, amid concerns of fresh claims of tax on past transactions by Indian authorities. The telecom stocks will keep buzzing with the government receiving commitments of Rs102,215 crore from telecom operators at the end of bidding on the 10th day of radio frequency spectrum e-auctions. At the end of 61st round, about 87 percent of the spectrum has been provisionally allocated to bidders. Metals and mining stocks too will be in action, as the government will begin issuing ownership rights on March 23 for the coal blocks that have been auctioned so far by the government, starting with successful bidders for 15 mines in the first tranche. There will be some stocks specific actions too based on the advanced tax payments.

The US markets ended in red in last session, there were some weak economic data that weighed on the sentiments. The Asian markets have made mostly positive start, though the mood was cautious as investors awaited this week’s Federal Reserve meeting for clues on the timeline for higher US interest rates.

Back home, Indian barometer gauges witnessed bloodbath on Friday with both the major indices losing around one and a half percentage points due to profit-booking by funds and retail investors. The falls marked a sharp retreat from earlier gains of nearly a percent on optimism about the government’s reform agenda after Parliament had on Thursday passed a bill raising foreign investment limits in the insurance sector. Selling was both brutal and wide-based as none of sectoral indices on BSE were spared and key gauges ending below their crucial 8,650 (Nifty) and 28,550 (Sensex) levels. Counters, which featured in the list of worst performers, include banking, power, capital goods and realty. Sentiments turned down-beat as retail inflation rose to 5.37 percent in February, the third consecutive month of uptick, diminishing hopes of another rate cut by the Reserve Bank. Marketmen failed to draw any sense of relief from report that index for industrial output (IIP) for the month of January came in at 2.6%, way higher than street expectation of 0.50% and also higher compared to 1.7% in December mainly on account of splendid growth of manufacturing sector. Investors also remained on sidelines ahead of data on inflation based on the wholesale price index for February 2015 and Corporate advance tax payment for the fourth and final installment which is due by Sunday, 15 March 2015, could provide clues on Q4 March 2015 corporate earnings. Though, the European markets made a positive opening and Asian markets ended mostly in the green, but back home the traders failed to draw any solace from report that India and Mauritius agreed to fast-track the long-pending revision of Double Taxation Avoidance Agreement (DTAA) to prevent abuse of the convention. Depreciation in Indian rupee too dampened the sentiments. Finally, the BSE Sensex plunged by 427.11 points or 1.48% to 28503.30, while the CNX Nifty dropped by 128.25 points or 1.46% to 8,647.75.