Markets to make a positive start on good global cues

The Indian markets slumped to their 52 week low in the last session, disappointed by lack of any big-bang reform from the railway budget. Today, the start is likely to see some recovery tailing the positive global cues, however all eyes will be on another important event of the release of Economic Survey report in the parliament. Chief Economic Advisor, Arvind Subramanian, will present his second Economic Survey. It’s the economic report card for the financial year that’s just about to conclude and projections for the ensuing fiscal year. The report will shed light on the investment climate, stalled projects, debt overhang and other factors that have been acting as deterrents to growth. The railways stocks will again be in focus after showing a disappointing performance on the budget day. Meanwhile, Union Railways Minister Suresh Prabhu has reiterated that aspirations, needs and concerns of common man were kept in mind while framing this years’ Budget. He added that the Budget aims at modernising, improving safety, speed, and revenue resources of the railways. The banking stocks too will be in action, with a Parliamentary panel expressing its unhappiness with handling of bad loans by RBI and banks, saying that high NPAs raise serious questions about credibility of the mechanism to deal with the issue. Also, the RBI has revised SDR norms, asking banks to have higher provisions of 15%.

The US markets rallied in last session, supported by substantial rebound by the price of crude oil. Also, there was a report from Commerce Department showing a much bigger than expected rebound in durable goods orders in the month of January that lifted the mood of investors. The Asian markets have made an all green start with major averages on track for their second straight weekly gain, amid meeting of the Group of 20 finance chiefs discusses coordination of stimulus efforts.

Back home, Thursday’s session saw Indian benchmark indices complete a hat-trick of disappointing performances and reaching the finishing line only after collapsing by around half a percent to their fresh 52 weeks low. Sentiments remained down-beat as International Monetary Fund warned that the world economy is highly vulnerable and called for new mechanisms to protect the most vulnerable countries. The global crisis raised concern that world growth had slowed and could be derailed by market turbulence, the oil price crash and geopolitical conflicts. On the domestic front, sentiments got undermined after the railway budget failed to announce big ticket capital expenditure projects, so as to meet the government's fiscal deficit targets.  Also, Railway Minister proposed increasing the capital outlay for the Railways, the world’s fourth-largest rail network, by 21 per cent to Rs. 1.21 lakh crore.  Depreciation in Indian rupee also weighed on investor sentiment. The rupee weakened by 18 paise to trade at 68.74 against the US dollar at the time of equity markets closing as compared to 68.56 in previous session. Market participants remained cautious 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. However, losses remained capped on the report that business sentiment among Indian companies rose for the second consecutive month in February, as companies increased production on the back of rising orders. The increase in sentiment was solely led by manufacturing firms where confidence was at a seven-month high. On the global front, Asian equity markets made a mixed closing on Thursday, while European stocks climbed in early deals. Back home, benchmark got off to a soft start as the indices showed signs of consolidation in early trade, as investors remained cautious ahead of the Railway Budget. Finally, the BSE Sensex plunged by 112.93 points or 0.49% to 22976.00, while the CNX Nifty dropped 48.10 points or 0.69% to 6,970.60.