Markets to make a mildly soft-to-cautious start

The Indian markets embroiled in global turmoil lost considerable ground in last session. Traders were also concerned about the slow GDP growth in third quarter, ignoring CSO estimation of a five year high growth for the fiscal. Today, the start is likely to be soft-to-cautious on weak global cues. Also, the weak earnings of PSU banking stocks too are likely to weigh on the sentiments, three state-run lenders - Central Bank of India, Dena Bank and Allahabad Bank - reported massive losses and the spillover effects are likely to be seen on the other banking stocks today too. Market experts are of view that as India’s benchmark Sensex has underperformed all major emerging market indices in 2016, barring China, the situation may worsen further. However, there will be some support to the markets with Economic Affairs Secretary Shaktikanta Das underscoring the importance of reforms, stating that the 7.6 percent GDP growth is 'significant' amid the global turmoil and there is no need to be 'skeptical'. The power sector stocks will be in action, as Power Minister Piyush Goyal has said that  India is expected to spend a whopping $ 1 trillion (about Rs 65 lakh crore) by 2030 on ramping up its power infrastructure as one of the world's largest energy consumers aims to provide 24/7 electricity to its citizens. Goyal has also said that there is need for the technology transfer at affordable rates for efficient expansion of renewable energy in India.

The US markets continued their downtrend and ended modestly in red in last session, the trade remained volatile unable to sustain any significant moves. Traders were looking ahead to remarks by Federal Reserve Chair Janet Yellen on Wednesday. The Asian markets have plunged further in red, led by the Japanese market as persistent concern over market volatility helped the yen strengthen.

Back home, the carnage in Indian stock markets got prolonged as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage point on Tuesday. Sentiments turned down-beat after Japanese equities posted its biggest daily drop in nearly three years amid strengthening yen. On the domestic front, sentiments got undermined after India reported GDP figures that suggested India's economic growth slowed in the third quarter, adding to pressure on Prime Minister Narendra Modi’s government to expedite stalled reforms in the next session of parliament when it presents its annual budget. According to the Central Statistics Office (CSO), India’s economy grew 7.3% year-over-year in the quarter and is expected to grow 7.6% for the entire fiscal year. Besides, deprecating rupee against the dollar also influenced the sentiment. Extending its fall for the third consecutive session, the rupee fell by 19 paise to 68.13 against the US dollar due to increased demand for the American unit from importers and banks. Investors also remained cautious with the expectation of rising inflation after the report that India’s agriculture growth, measured in terms of gross value added at constant prices, slipped into negative territory in the October-December quarter (first time in FY16) because of a low kharif harvest. On the global front, European stock markets dropped for a seventh straight session on Tuesday, while in Asian markets Japan’s Nikkei tumbled to a 2 -1/2 week low. Back home, the benchmark got off to a gap down opening, in tandem with the somber sentiments prevailing in global markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges traded on a lackluster note for most part of the morning trades and drifted to the lowest point in the session in mid afternoon trades. Though the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Finally, the BSE Sensex declined by 266.44 points or 1.10% to 24020.98, while the CNX Nifty dropped 89.05 points or 1.21% to 7,298.20.