Markets to start on weak note tailing feeble global cues

The Indian markets completely lost its momentum in the final hours and major averages lost over a percent, tailing the weakness in other markets and disappointed by RBI’s status quo stance in its monetary policy. Today, the start is likely to be weak and the markets will extend their somberness for yet another day amid feeble global cues. While there will still be lingering disillusionment of RBI’s policy stance, the commodity stocks will be under pressure taking cues from their global counterparts. However, there will be some solace with the Reserve Bank keeping its growth projections for Indian economy unchanged at 7.4 percent for the current fiscal, a tad higher than 7.3 percent forecast by the World Bank. Traders will also be eyeing the Services PMI data, meanwhile IBM chairman & CEO Virginia Rometty has said that the 21st century will belong to India. She said India would be at the centre of the fourth technology shift that she refers to as the cognitive era. The export oriented stocks will be in action, as the Commerce Ministry has asked exporters to come up with specific suggestions which could be taken up with various ministries, including Finance, to improve ease of doing business and boost waning exports.

There will be lots of result announcements too, to keep the markets buzzing. Bajaj Hindusthan, Bajaj Finserv, Dish TV, Dalmia Bharat, Pfizer, Hexaware, KEC, Thomas Cook and Redington India, are among many to announce their numbers during the day.

The US markets suffered sharp sell-off in the last session amid a notable decrease by the price of crude oil. Though, the trading activity too remained light, as some traders were on the sidelines lacking any major US economic news. The Asian markets have made a weak start, as oil slumped below $30 a barrel eroding investor confidence in global economic growth. The loss in the region is led by the Japanese market which is down by over three percent as yen surged on demand for safer haven.

Back home, Tuesday’s session turned out to be a nasty one for the Indian equity benchmarks which tumbled like a ‘house of cards’ and went on to breach various key technical levels in the over a percent freefall. Sentiments turned pessimistic after the Reserve Bank of India (RBI) kept its key policy rates unchanged, opting to wait for the government’s annual budget statement at the end of February for further easing. Sentiments weakened further with Moody’s Investors Service’s report that RBI’s target to bring down retail inflation at 5 per cent by March 2017 will face some risks from monsoon uncertainty and execution of seventh Pay Panel recommendations, while macro-economic factors will be critical for sustaining growth. Market participants remained worried that the union budget might increase effective corporate tax rate by doing away with a host of tax exemptions. Depreciation in Indian rupee too weighed down sentiments. The rupee depreciated by 12 paise to trade at 67.96 against the US dollar at the time of equity markets closing. Investors failed to draw any solace from report that Core sector output returning to positive territory in December 2015 by registering a 0.9 per cent growth after shrinking (-) 1.3 per cent in November last year. On the global front, Asian equity markets ended mostly in red, while European equities too fell sharply in early trade as crude oil prices slipped again. Back home, after getting positive start, Indian benchmark indices showed signs of consolidation in early trade and entered into negative territory in noon session. But, the sentiments got spooked in late afternoon trades following the sell-off in European markets. Thereafter, the frontline indices lost the plot and kept tumbling down the hill without any stoppage. The sharp cut dragged key indices to intraday lows of around 24,450 and 7,430 levels post which some short covering helped the indices to settle off the day’s lows. Finally, the BSE Sensex declined by 285.83 points or 1.15% to 24539.00, while the CNX Nifty lost 100.40 points or 1.33% to 7,455.55.