The Indian markets suffered sharp sell-off in last session, coming after a long weekend with benchmarks losing over a percent in broad based selling by funds and retail investors. Today, the start is likely to remain somber and the markets may extend their weakness in early deals on sluggish global cues. However, there will still be hopes of rate cuts from the RBI that could support the markets in latter trade after Finance Minister Arun Jaitley said interest rates in India are “extraordinarily” high and the country risks becoming the most sluggish economy if lending rates continue to rule high. Meanwhile, RBI Governor Raghuram Rajan has said that there should be guidelines for responsible monetary policy behaviour globally as aggressive actions by one nation can lead to significant adverse cross- border spillovers on others. Rajan said monetary policy could be broadly characterised and rated based on analytical inputs and discussion. Gold and Jewellery stocks will continue to remain under pressure on a report that demand is expected to record a sharp fall of 71 per cent to 40-50 tonnes in the March quarter against the 173 tonnes logged in the December quarter due to the strike. There will be some action in steel stocks too, as the government has asked Washington to comply with the dispute settlement body’s ruling against countervailing duties (CVD) imposed on imports, in order to help the debt-ridden steel industry regain its foothold in the US market for hot-rolled carbon steel products.
The US markets made mostly a flat closing following the long Easter weekend. The trade remained choppy as the traders expressed some uncertainty about the near-term outlook for the markets, ahead of the release of some closely watched data later in the week. The Asian markets have once again made a mixed start, as crude oil extended decline and on concern slowing growth in China and political upheaval in some emerging markets will derail global expansion.
Back home, the Indian equity markets lost over a percent on Monday, posting their biggest single-day fall in five weeks, as investors booked profit after an upward revision in US fourth quarter GDP numbers signaled strength in the world’s biggest economy, bolstering the case for the Federal Reserve to tighten interest rates further in the coming months. Sentiments weakened further with the Centre imposing President’s rule in Congress-ruled Uttarakhand, which could impact the functioning of the second half of the budget session and hinder passage of any crucial Bill. Besides, depreciation in Indian rupee against dollar and rise in crude oil prices also dampened investor sentiment. Investors also remained cautious with the private report indicating Indian economy to grow at 7.2 per cent in 2016-17, a tad lower than Central Statistics Office's advance estimates of 7.6 per cent in the current fiscal due to weak investments and external headwinds. According to the report, Indian economy continues to face multiple challenges, and this is being reflected in high frequency data such as industrial production and trade. Meanwhile, market participants were patiently waiting for the Reserve Bank of India (RBI) monetary policy review due on April 5 amid hopes of a 25 basis points cut in interest rates. Also, volatility is likely to be witnessed this week on account of March series futures and options contracts expiry. On the global front, Asian markets ended mostly in red on Monday, while European markets were closed for the Easter holiday. Back home, the benchmark got off to a flat opening with a positive bias following supportive leads from Asian markets. Sentiments remained optimistic in thin trades triggered by a slew of encouraging economic reports from the US. However, the indices dropped into the red terrain, lacking any significant upside cues. Finally, the BSE Sensex plunged by 371.16 points or 1.46% to 24966.40, while the CNX Nifty dropped 101.40 points or 1.31% to 7,615.10.
