Markets to make a soft start on sluggish global cues

The Indian markets despite a bounce back in final hours, made a flat closing with a negative bias in last session. Today, the start is likely to remain soft and the Nifty may retest 8100 level in very opening deals, tailing the global market sluggishness. Traders may however get some support with Finance Minister Arun Jaitley allaying fears over predictions of deficient monsoon, saying that conclusions on that basis either on inflation or some kind of distress situation are 'far-fetched'. A finance ministry official too has stated that the government will soon come up with a comprehensive contingency plan to deal with the impact of deficient monsoon that could include using MNREGA funds for some activities to provide relief in drought-hit areas. There will be some buzz in the coal, cement and steel sector stocks, as the government has said that it will auction 10 coal mines in the third tranche with reserves of 858.19 million tonnes for steel, cement as well as captive power plants and the process will be completed by August end. The PSU stocks too will be in action, as Finance Minister Arun Jaitley has said government’s disinvestment programme will continue as planned. FMCG pack especially Nestle will be under pressure with the company withdrawing Maggi Noodles after ban in five states.

The US markets ended lower in last session with major averages pulling back sharply ahead of the monthly jobs data and the Dow and the S&P 500 falling to their lowest closing levels in nearly a month. There was volatility in the markets with the International Monetary Fund, urging the Federal Reserve to delay raising interest rates until the first half of next year. The Asian markets have made mostly a lower start taking cues from the US markets and concerned about development in Europe, as Greece asked for a deferral on its debt payments, though the Chinese market was surging, extending its last session’s recovery.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Thursday to end flat, pairing almost all of their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Sentiment remained down-beat after a Reserve Bank of India (RBI) sponsored survey stated that the economy is expected to grow at a rate of 7.8 percent in the current fiscal, a shade lower than earlier forecast of 7.9 percent. Sentiments also remained dampened on report that FDI in India declined by sharp 40 per cent year-on-year to $2.11 billion in March 2015, compared to $3.53 billion in March 2014. Earlier, after a cautious start markets extended their downfall to touch intraday lows. The indices even went on to test important psychological 26,600 (Sensex) and 8,050 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon to end tab below their neutral lines. Moreover, some respite came with agriculture minister Radha Mohan Singh’s statement that contingency plans were ready for 580-odd vulnerable districts across the country and the government was adequately prepared to contain losses of farm production. The India Meteorological Department (IMD) confirmation that the much-awaited southwest monsoon is likely to set over Kerala in the next 48 hours, too failed to lift the mood. Some support also came with Coal Secretery announcing third round of coal block auction for 10 mines, with bidding starting from June 8 for the unregulated sectors. Auctions will be conducted between August 11-17 and will be completed by August 31. On the global front, European counters made a weak start, while Asian markets too ended mostly in the red. Back home, depreciation in Indian rupee too weighed on the sentiments. Selling in Auto stocks too dampened the sentiments as broking firms have started lowering earnings estimates on concerns that weak monsoon could hurt volume growth. Moreover, the fears of drought and its impact on the rural economy continued to pressurize FMCG stocks. On the flip side, stocks related to information technology sector edged higher on the back of depreciation in rupee. Finally, the BSE Sensex declined by 23.78 points or 0.09% to 26813.42, while the CNX Nifty lost 4.45 points or 0.05% to 8,130.65.