Markets to get a bounce back on supportive global cues

The Indian markets went through late hour slide in last session, which dragged the benchmarks lower by around a percent. Today, some stabilization is expected on the back of positive global cues. Traders will also be drawing some comfort with Prime Minister Narendra Modi in the last leg of 3-nation tour in Canada saying that there is an atmosphere of trust in India and there is one solution to all the problems and that is development. There will be some buzz in the PSU oil marketing companies, as in a second reduction in the rates, petrol prices have been cut down by 80 paise a litre and diesel by Rs 1.30 per litre. Aviation stocks too may see some action, as the aviation regulator directorate general of civil aviation (DGCA) is planning to conduct a financial audit of Indian carriers to check if their poor fiscal health is not affecting safety of passengers.

The US markets bounced back and ended higher in last session supported by rally in energy sector stocks. Though, there were mixed set of economic data with reports showing a bigger than expected rebound in homebuilder confidence but a bigger than expected drop in industrial production. The Asian markets have made mostly a positive start, rebounding from their last session’s fall, as materials companies and energy producers led gains.

Back home, Wednesday’s trading session turned out to be a daunting one for stock markets in India and benchmarks ended below their crucial 8,800 (Nifty) and 28,800 (Sensex) levels as investors booked profit in technology stocks like TCS and Infosys on worries that strength in the rupee after inflation data may persist and hurt revenues. Moreover, investors remained sidelines ahead of corporate performance of big companies like TCS and Reliance Industries. After trading in tight band for most part of the day’s trade, domestic gauges crashed like house of card in the last leg of trade. Selling was both brutal and wide-based as none of sectoral indices, barring FMCG and oil and gas, on BSE were spared. Counters, which featured in the list of worst performers, include healthcare, infrastructure, auto and technology. Investors failed to dray any sense of relief from better-than-expected macro economic data. India’s consumer price index (CPI) inflation slowed to 5.17% year-on-year in March, compared to 5.37% in February, while the annual rate of inflation, based on monthly wholesale price index (WPI) ebbed to- 2.33% in March as compared to -2.06% witnessed in February, which could encourage the central bank to deliver another off-cycle interest rate cut to boost economic recovery. Besides, markets also failed to draw heart from International Monetary Fund’s (IMF) statement that India will overtake China as the fastest growing emerging economy in 2015-16 by clocking a growth rate of 7.5 percent on the back of recent policy initiatives, pick-up in investments and lower oil prices. Also, a senior American trade official has reportedly said that a series of reforms unleashed by India in recent months are “important steps” around open, predictable and rules based reforms. On the global front, Asian markets ended mostly in the red led by Chinese Shanghai Composite, however, European markets made a positive start. Back home, software and technology related stocks declined after lower-than-expected US retail sales in March. Power stocks too edged lower despite government setting a target of generating close to 1,100 billion units of electricity during the current financial year as the coal supply at thermal power stations has eased. Markets remained closed on Tuesday on account of a local holiday. On the flip side, oil & gas sector’s stocks especially in Reliance Industries edged higher with the Union government telling the Supreme Court that the pricing of domestically produced gas comes under its “supervisory powers” and its dispute with Reliance Industries cannot be subjected to arbitration proceedings. Finally, the BSE Sensex plunged by 244.75 points or 0.84% to 28799.69, while the CNX Nifty dropped by 83.80 points or 0.95% to 8,750.20.