Markets to remain in cautious mood with a flat start

The Indian markets suffered sharp cuts in last session, extending their previous week’s losses with Nifty ending at its lowest level in this calendar year. Today, the start is likely to remain cautious and the markets may remain in range in early deals on sluggish global cues and eyeing key macro data slated to be announced later in the week. There will be some concern related to deficient monsoon, as Prime Minister Narendra Modi has said that India must quickly expand its irrigation network and improve water usage to offset the impact of less monsoon rainfall than usual, while Agriculture Minister Radha Mohan Singh said that sustaining 4 percent growth in the farm sector is a challenging task though it remains one of the top priorities of the government. There will be some action in the banking sector, as the Reserve Bank of India issued new norms for Strategic Debt Conversion (SDR) which will give lenders the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package. The steel, cement and power stocks too will be buzzing with government kick-starting the process for auction of 10 coal blocks in the third tranche, inviting bids from companies engaged in sectors like steel, cement and captive power generation.

The US markets made a lower closing in last session in a listless trading on renewed fears the Federal Reserve will soon raise interest rates. The Asian markets have made mostly a lower start, tracking the losses on Wall Street and European markets overnight. Also China inflation data fanned concern demand is cooling in the world’s second-biggest economy. The Japanese stock market too was trading weak ahead of the consumer confidence data later in the day additionally, a stronger yen too weighed on exporters’ stocks.

Back home, extending their southward journey to fifth straight session, Indian equity benchmarks ended the Monday’s trade with a cut of around a percentage point. After a cautious start, the domestic bourses never looked in recovery mood and ended the trade near four and a half week lows, breaching their crucial support levels of 26,600 (Sensex) and 8,050 (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 consumer durables, metal and oil and gas.  Sentiments remained dampened with industry body, Assocham’s  latest assessment that in the face of slow global demand for merchandise, India’s exports in the current financial year are likely to stay flat or may even move backward of $ 310 billion, the figure achieved in 2014-15. Also, global credit rating agency Moody’s said that below-normal rains would be credit negative for India’s ratings as it would lower farm output and stoke food prices. Fears of selling by foreign funds on expectation of a rate hike by the US Fed amid strong jobs data dampened market sentiment. Moreover, traders looked cautious ahead of some of the key macro data scheduled to be announced later in the week, while the Reserve Bank of India (RBI) is scheduled to announce current account deficit (CAD) data for the fourth quarter of 2014-15 after the market hours. Sentiment was also hurt by weak global cues, while European markets traded in red in early deals, the Asian markets ended mostly in red. Back home, depreciation in Indian rupee also weighed on sentiments. Sentiments also remained dampened on reports that foreign institutional investors were net sellers to the tune of Rs 550 crore on Friday. Finally, the BSE Sensex plunged by 245.40 points or 0.92% to 26523.09, while the CNX Nifty dropped by 70.55 points or 0.87% to 8,044.15.