Markets likely to get a soft-to-cautious start

The Indian equity markets though managed a positive close on Friday but lost strength and turned marginally negative on Saturday in a special trading session. PSU sector remained in limelight throughout the session along with power and banking stocks, while other gauges lacked much buying interest. Today, the start is likely to be cautious and the markets may extend the declining trend. Traders will now be eyeing the state election results to be announced tomorrow. Traders will also be waiting to see the developments in Europe for any direction as the economic reports in the region has been week. On the domestic economic front, Department of Industrial Policy and Promotion (DIPP) has set up a committee under planning commission member Saumitra Chaudhuri to look into the reasons behind the large fluctuations and growing divergence between government industrial numbers measured by the IIP and that of other private agencies. There will be lots of scrip specific movement too, to keep the markets buzzing.

The US markets closed marginally lower on Friday lacking any supportive cues, only positive was the decline crude prices that helped the energy stocks. Investor focus shifted to Europe as no economic releases were expected, now investors are closely monitoring whether private creditors will participate in Greece's debt swap. The Asian markets have made a mixed start, with most of the indices trading in red on news that Chinese service industries contracted and the nation was targeting the slowest growth since 2004.

Back home, Indian frontline equity indices snapped a volatile session on a positive note, settling with gains of around one third of a percent. Despite trading with good gains through the late morning - early afternoon period the bourses failed to build on the impetus as domestic markets got influenced by the unenthusiastic cues from the European markets. The enthusiasm appeared tempered also because of the spike up in international crude oil prices that kept optimism under check. The rally in oil prices would certainly have spiraling effect on the Indian economy as the nation imports more than 70% of the commodity for domestic requirements, thus re-fuelling the inflationary concerns. Investors also lacked confidence to open fresh long positions as ONGC auction debacle battered divestment hopes and underscored the vulnerable government’s wayward policies which might spoil the country's economic attractiveness. In the interim, hefty buying in heavyweights from banking, Healthcare and capital goods counters capped the downside risks for the benchmark indices. The BSE’s Bankex index spurted about one and half a percent, thanks to hefty gains in bellwethers like ICICI Bank, SBI, Axis Bank, while the surge in L&T pushed the Capital Goods index over half a percent higher. However, the high beta Realty index got brutally pounded by over two percent after heavyweight DLF continued to reel under immense selling pressure as reports flagged concerns about the company's financial health. Meanwhile, automobile and cement sector stocks kept buzzing in the session as major companies reported their monthly sales numbers. On the global front, apart from the overnight gains in US markets on the back of encouraging set of economic reports including the US jobs data, markets in Asia too moved higher as HSBC surveys underscored that manufacturing activity in the region remained resilient. European stock futures though traded on a flat note with a positive bias as investors cheered reports that the region’s leaders agreed to speed up payment to the permanent bailout fund. Back home, the broader markets after showing some resilience slipped into the negative terrain and settled with marginal losses, underperforming their larger peers. On Saturday in a special trading session the markets closed flat with negative bias. BSE Sensex closed at 17,636.99, down by 0.19 points, while the S&P CNX Nifty closed at 5,359.40, down by 0.05 points.