Markets to get a cautious start ahead of Rail Budget

The Indian markets suffered sharp cuts in last session, as the global markets started melting. Today is the crucial day for the markets with two important events lined up, first the Railway Budget and later the expiry of the volatile February F&O series. The start of the day is likely to be cautious and all eyes will be on the Rail Budget and its announcements. Railway Minister Suresh Prabhu has said that the Rail Budget will cater to the needs of all “satisfactorily” as a lot of effort has gone into its preparation. Meanwhile, in a big development, the Cabinet has approved withdrawal of surcharge, service charge and convenience fee on card and digital payments, with an aim to discourage cash transactions. Later half is likely to see volatility owing to series expiry, markets will be a bit cautious too with a private survey stating that optimism about the overall state of the economy came down in 2015, with households listing unemployment, corruption and rising inflation as major areas of concern. While, all the railways related stocks will be in action, there will be buzz in the solar power related stocks too, as WTO in a matter in which the US had filed a complaint before the global trade body alleging discrimination against American firms, has ruled against India saying that the government's power purchase agreements with solar firms were 'inconsistent' with international norms.

The US markets made a bounce back in last session, rebounding along with the crude oil prices and offset the steep loss posted in the previous session. Traders even shrugged off a report from the Commerce Department showing a much bigger than expected pullback in new home sales in the month of January. The Asian markets have made a mixed start and some of the indices are trading in red led by the Chinese market which is down by over a percent. On the other hand the Japanese market was up tracking a late-afternoon rally in the US as crude oil and copper prices stabilized.

Back home, The bloodbath in Indian equity market prolonged for one more session as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage point on Wednesday. The session was characterized by extreme volatility and marketmen looked at every rise as opportunity to take profits off the table, as there emerged no supporting factor that could halt the unrelenting selling pressure. Investors' confidence was eroded by the continuing conflict between the ruling NDA (National Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations that await parliamentary approval. Further, sentiments remained down-beat with Moody's Investors Service’s statement that India's fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation roadmap. It said that without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers. Market participants were also jittery ahead of the Budget amid hopes that policymakers will deliver a fiscally responsible budget that nonetheless steers spending to key areas such as infrastructure. Meanwhile, investors failed to draw any sense of relief with President Pranab Mukherjee describing the country as a haven of ‘stability’ in a turbulent global economy, saying the government has simplified procedures for approvals, repealed obsolete laws and put in place a non-adversarial tax regime to attract investments. On the global front, Asian markets ended mostly in red, while European counters also made an awful start with all major counters declining over a percent. Back home, the benchmark got off to a somber opening, extending the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. The key indices failed to show any kind of fervor due to lack of encouraging leads and suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex plunged by 321.25 points or 1.37% to 23088.93, while the CNX Nifty dropped 90.85 points or 1.28% to 7,018.70.