Markets to make a cautious start on sluggish global cues

The Indian markets suffered profit booking in the final hours of the last session after making a flying start, both the benchmark indices lost over half a percent for the day. Today, the start is likely to remain cautious tailing sluggish global cues. Traders are likely to remain more focussed on domestic developments included the ongoing budget session in Parliament. Meanwhile, Finance Minister Arun Jaitley referring to doubts expressed by various sections over the GDP figure of 7.4 percent for 2014-15 as projected by the Central Statistical Organisation's (CSO), sought to dispel doubts, saying that the GDP calculations are made independently by the CSO, which is a credible organisation. There will be some buzz in the power stocks, as the international credit rating agency Crisil has said that the recent coal block auctions might have addressed some fuel supply issues, but private power producers with nearly 10,000 MW capacity may have to face under-recovery to the extent of 65 paise per unit because of aggressive bidding. Traders will also be eyeing the rupee movement which strengthened further in last session after the Federal Reserve’s dovish stance on rates eased outflow concerns. 

The US markets made a mixed closing in last session following a lackluster trading. Traders initially reacted positively to the apparent dovishness of the Fed but a report showing a modest uptick in initial jobless claims in the week ended March 14th, weighed on the sentiments in the latter trade. The Asian markets have mostly made a soft start led by decline in materials and technology stocks, though the Chinese stocks advanced for the eighth day to its highest level since 2008.

Back home, Thursday’s trading session turned out to be a disappointing for the Indian equity markets as profit booking emerged during late noon trades in banking and auto shares. The domestic benchmarks traded jubilantly for most part of the trades but a sharp wave of selling, which emerged in last leg of trade, dragged the key gauges below their crucial 8,650 (Nifty) and 28,500 (Sensex) levels. After making a gap-up start markets traded jubilantly as investors reacted positively to the Fed’s monetary policy announcement, viewing its statement as dovish regarding the outlook for interest rates. Fed Chair Janet Yellen noted that removing the word patient from the statement doesn’t mean the central bank is going to be impatient. But, suddenly markets took a U-turn in final hour of trade as market-participants resorted to incremental profit-booking activities at higher levels. Sentiments remained dampened on report that foreign institutional investors were net sellers in equities to the tune of Rs 457.43 crore on Wednesday, as per provisional stock exchange data. Investors also shrugged off Organisation for Economic Cooperation and Development’s (OECD) bullish outlook for India, which in its interim economic assessment report has said that India is poised to grow 7.7 percent this year and 8 percent in 2016 to become the “fastest growing major economy.” On the global front, European counters made a firm start, while the Asian markets ended mostly in green. Back home, banking shares ended lower erasing their entire morning gains on the back of profit booking in late trade. Software and technology stocks too remained under pressure for yet another session of rupee’s strength. Additionally, Airlines stocks like Spicejet and Jet Airways ran out of steam after civil aviation ministry tightened the eligibility criteria norms for flying international routes by increasing the domestic flying credits (DFCs) eligibility to 300 DFC from the current 200. According to the new proposal, airlines will have to accumulate DFCs by flying to more cities in India and will have the right to automatically fly overseas once the credits cross a certain threshold. Finally, the BSE Sensex plunged by 152.45 points or 0.53% to 28469.67, while the CNX Nifty dropped by 51.25 points or 0.59% to 8,634.65.