Markets to remain in somber mood with a mildly lower start

The Indian markets were butchered badly in last session with benchmarks losing around two and half a percent in a single day and slipping below their crucial psychological levels, after RBI signaled a pause after its third rate cut in the year and met department came up with a deficient monsoon forecast. Today, the start is likely to remain cautious and benchmarks may make another lower start after a sharp plunge and Nifty may retest crucial psychological level of 8,200. Traders will remain concerned about the monsoon and expectation of spurt in inflation, also as the Reserve Bank of India has lowered the economic growth forecast for the current fiscal to 7.6 percent from 7.8 percent projected in April, citing various risks, including poor monsoon and rising crude oil prices. Markets may see some recovery in latter part of the day taking cues from the other global markets. There will be some buzz in the logistics and MHCV stocks, as a private survey has said that the ambitious Goods and Services Tax (GST) would help the transportation sector in improving its efficiency besides reducing the logistics cost.

The US markets despite some late hour recovery ended modestly lower in last session. The trade remained volatile throughout the day and traders remained concerned about Greece and the possibility of a default by the debt-ridden nation. The Asian markets have once again made a mixed start with some indices trading marginally in red; though the Chinese market was trading higher amid optimism government stimulus measures will buoy the economy.

Back home, Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by around two and a half percentage points as investors sold stocks across sectors after the Reserve Bank of India (RBI) lowered its FY16 GDP growth estimate amid sub normal monsoons concerns and crude price hike. After a cautious start, the domestic bourses never looked in recovery mood and ended the trade near two and a half week lows, breaching their crucial support levels of 27,200 (Sensex) and 8,250 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included realty, banking and fast moving consumer goods. Sentiments remained down beat after the RBI at its monetary policy review signaled that further rate cuts could be delayed. Though, it reduced the benchmark repo rate, or the rate at which banks borrow from the central bank, by 25 basis points to 7.25% which was in-line with expectations. Meanwhile, it has kept both CRR and SLR rates unchanged. Sentiments also remained dampened after India Meteorological Department (IMD) has downgraded this year’s monsoon forecast to 88% of the long-term average from April forecast of 93% of the long-term average. Contraction in the output of eight core industries by 0.4 per cent in April on poor performance of electricity, cement, refinery products and fertiliser sector too dampened the sentiments. Selling got intensified as European markets, after a positive start, turned red, while most of the Asian equity indices ended the session in the red terrain. Back home, depreciation in Indian rupee against dollar too dampened the sentiments. Slump in rate sensitive counters too played spoil sport for the Indian equity markets. Bank shares edged lower amid concerns of sluggish credit growth while asset quality concerns continued to weigh on the sector. Finally, the BSE Sensex plunged by 660.61 points or 2.37% to 27188.38, while the CNX Nifty declined by 196.95 points or 2.34% to 8,236.45.