Markets likely to get a green start on good earnings of TCS

The Indian markets continued their downtrend in last session despite a good start and traders looked concerned about the earnings season, ahead of IT bellwether TCS announcing its fourth quarter numbers. Today, the start is likely to be in green and some recovery can be expected with Tata Consultancy Services posting a better than expected rise in net profit led by strong worldwide client spending. The company posted a 30.7 per cent fall in net profit for the fourth quarter due to a one-off bonus paid to employees. The company reported a net profit of Rs 3,858 crore for the March quarter, excluding cumulative bonus payout of Rs 2,628 crore to employees. Traders will also be getting some support with Reserve Bank of India Governor Raghuram Rajan’s statement that on some issues the government and the central bank were “trying to persuade one another” but on many others the two sides are on the same page. However, there will be some cautiousness too, with global rating agency Standard and Poor's stating that a policy logjam and “red tape” have hindered investments in India. Banks will remain in action with RBI allowing them to offer differential rates to fixed deposit holders. There will be some buzz in the oil & gas stocks too, as the government has exempted oil producers ONGC and Oil India from payment of fuel subsidy in the fourth quarter.

The US markets made a flat closing with negative bias in last session after a choppy trade, with some disappointing economic data weighing on upbeat earnings report. Commerce Department reported a much smaller than expected rebound in housing starts. The Asian markets have made mostly a positive start with Hong Kong and Shanghai extending gains at seven-year highs, though the Japanese market was in red on strengthening yen after weak US economic data.

Back home, extending their losing streak to third straight session, Indian equity benchmarks ended the Thursday’s trade with a cut of around half a percent. Investors remained on sidelines ahead of some big earnings announcement which would guide the movement in the market. IT bellwether Tata Consultancy Services (TCS) is expected to report a muted fourth quarter earnings today, putting the whole sectoral gauge in the somber mood. However, losses remained capped up to certain extent as some comfort came in 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. Earlier, markets made a cautious start and extended their southward journey as investors continued to book profit in technology stocks like TCS and Infosys on worries that strength in the rupee after inflation data may persist and hurt revenues. Domestic indices even went on to test important psychological 28,500 (Sensex) and 8,650 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their losses from thereon as investors continued hunt for fundamentally strong stocks. Some support also came on report that foreign institutional investors were net buyers in equities to the tune of Rs 108 crore on Wednesday, as per provisional stock exchange data.  On the global front, European markets made a sluggish start, while the Asian markets ended mostly in green. Back home, selling was both brutal and wide-based as none of sectoral indices, barring oil and gas, on BSE were spared. Counters, which featured in the list of worst performers, include realty, capital goods and healthcare. Additionally, stocks of public sector oil marketing companies i.e BPCL, HPCL and IOC edged lower as crude oil prices firm up. On the flip side, sugars stock surged on reports that the government plans to substantially hike the import duty on sugar. Finally, the BSE Sensex declined by 133.65 points or 0.46% to 28666.04, while the CNX Nifty dropped by 43.50 points or 0.50% to 8,706.70.