Markets to get a flat start after a sharp fall of last session

The Indian markets tanked in last session giving up most of their last two session’s rally, both the benchmarks were down by over 2 percent amid worries that key reforms like Land Acquisition and GST would be delayed further. Today, the start is likely to be flat-to-cautious and traders will be first reacting to mixed set of macro numbers, while the Index of Industrial Production (IIP) numbers slowed to a five month low of 2.1 percent, the consumer price index in April fell to 4.87 percent from 5.25 percent in March, mainly on account of a fall in the prices of food items. Traders will be getting some support with Paris-based think tank OECD saying that India is poised for stable growth even as economic activities are easing in neighbouring and some other developed nations. In other encouraging development the Reserve Bank of India has called for higher capital outlays, consistent fiscal consolidation and limiting the debt-GDP ratio to improve the finances of the states, whose combined grossfiscal deficit has improved by 20 bps to 2.3 percent of GDP in FY 2014-15.There will be some buzz in the retail sector, as the government has retained the previous UPA regime's decision allowing foreign retailers to open multi-brand stores with 51 percent ownership, in its consolidated FDI policy. Banking stocks may turn jubilant on hopes of a rate cut after the weak IIP data.

The US markets extending their somber run ended modestly lower in last session, reacting to an extension of the recent global bond market sell-off, though major averages were well off their worst level for the day at closing. The Asian markets have made mostly a lower start, extending their retreat for the second day tailing the weakness in US markets.

 Back home, Indian barometergauges witnessed bloodbath on Tuesday with both the major indices losing overtwo percentage points and ending below their crucial 8,150 (Nifty) and 26,900(Sensex) levels. Selling was both brutal and wide-based as none of sectoralindices on BSE were spared. Counters, which featured in the list of worstperformers, include realty, power, capital goods, banking and metal. Sentimentsremained dampened since beginning of the trade as investors remained onsidelines ahead of the Industrial production (IIP) and Consumer Price Index(CPI) data to be unveiled later in the day. IIP is expected to have slowed to2.8-3.0 percent in March from three-month high of 5.0 percent a month before,while Consumer price inflation is expected to have eased to a four-month low of4.9 percent in April from 5.2 percent a month ago. Further, delay in thepassage of land acquisition and GST bill has also added to the worries ofinvestors. The contentious Land Acquisition Bill will be referred to a30-member joint committee both Houses of the Parliament while the Goods andServices Tax (GST) Bill will be referred to a select committee of the RajyaSabha. Meanwhile, giving further credence to India Meteorological Department’searly forecast in April of a sub-par southwest monsoon season, AustralianMeteorological Department said that the El Nino weather phenomenon has startedto take shape in the tropical pacific which is likely to result in deficientrainfall in the monsoon season. Selling got intensified as European marketsmade an awful start, while the Asian markets too ended mostly in the red. Backhome, depreciation in Indian rupee too dampened the sentiments. Banking stockswitnessed much of drubbing ahead of the release of April CPI data, which willbe guide RBI’s decision on interest rates in its upcoming monetary policymeeting. Banking stocks also slid on account of disappointing number of UCOBank, which slid over 8% after reporting net profit of Rs.209.20 crore for thefourth quarter ended 31 March 2015 as against Rs 303 in crore the same quarterlast fiscal. Finally, the BSE Sensex plunged by 629.82 points or 2.29% to26877.48, while the CNX Nifty dropped by 198.30 points or 2.38% to 8,126.95.