The Indian markets slumped in last session spooked by the remarks from Federal Reserve Chair Janet Yellen, who said the central bank will likely raise interest rates this year. Today, the start is likely to remain somber and markets will extend their weakness in early hours, though some recovery can be expected in latter part of the trade on hopes that the Reserve Bank of India (RBI) will go for a third cut in interest rates this year. Traders will also be getting some support with Finance Minister Arun Jaitley’s statement that he was confident that Goods and Services Tax (GST) regime would come into force from April 2016. He has said that passage of GST and the land acquisition bill would be the priorities of the government in the next session of the Parliament. Meanwhile, FICCI has said that restoration of investor confidence and establishment of ‘Brand India’ are the biggest achievements of the Narendra Modi government. The telecom stocks will remain in action with Vodafone reportedly planning to launch IPO of its Indian arm to raise about $4 billion next fiscal. On the other hand, the textile stocks may see some pressure, as the textile exports in 2014-15 registered a modest three per cent growth at $41.7 billion, against the targeted $45 billion.
The US markets remained closed on Monday, unable to give any cues to the other global markets, while the Asian markets have made a mixed start and some of the indices were trading in green, after the Singapore’s economy grew more than initially estimated last quarter as demand for the island’s exports improved amid a recovery in the US. Hong Kong stocks were trading at a seven-year high.
Back home, first day of May F&O expiry week turned out to be a disappointing session of trade for the Indian equity indices which got pounded by over a percentage point as traders remained cautious about the probable rate hike in the US by year end. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 27,700 (Sensex) and 8,400 (Nifty). Selling was both brutal and wide-based as, barring oil and gas; none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included metal, fast moving consumer goods and consumer goods. Moreover, foreign investors remained cautious with the Dispute Resolution Panel (DRP) of the income-tax department sending notices to foreign portfolio investors (FPIs), telling them that the hearing of MAT disputes would start soon. The investors would have to submit any additional material in this regard within the next nine days. Traders even over looked the Finance Minister Arun Jaitley’s statement, who while addressing the 31st Annual Conference of Principal Chief Commissioners of Income Tax said that we have to bring tax rate at global level while the same time removing the exemptions and expect a growth of 14-15 percent in direct tax collections this fiscal. On the global front, European stocks edged lower, however, Asian markets ended mostly in the green. Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 63.55 per dollar at the time of equity markets closing compared with its previous close of 63.52 per dollar. Selling in FMCG counter too weighed down sentiments, with ITC leading the fall. The FMCG major has dipped over 3% to in early morning trade after reporting a lower-than-expected 3.7% year-on-year (y-o-y) growth in its net profit at Rs 2,361 crore for the fourth quarter ended March 2015 (Q4) due to muted growth in cigarette business and decline in agri segment. Finally, the BSE Sensex plunged by 313.62 points or 1.12% to 27643.88, while the CNX Nifty dropped by 88.70 points or 1.05% to 8,370.25.
