Markets likely to get a cautious start, may recover in latter trade

The Indian markets continued their plunge on Monday in reaction to the pragmatic budget, though the FII’s continued pouring in their money but the domestic investors seemed worried of the fiscal condition. The rate sensitives’ were the hardest hit and only the defensive sectors like FMCG and HC could escape the wrath. Today, the start is likely to be somber but recovery can be expected in the latter hours of trade. IT and technology stocks may get a boost with the gains in their global counterparts. Rate sensitives are likely to remain cautious as the Finance Minister Pranab Mukherjee said on Monday that India's headline inflation rate, based on the wholesale price index, is likely to fluctuate for a couple of months. However, he added that headline inflation would tend to stabilise in the weeks ahead. Adding further he said that one should not expect a drastic fall in inflation to 4.0-4.5 per cent. “It would be around 6.5-7.0 per cent for the year as a whole”. There will be some scrip specific actions to keep the markets buzzing. Kighfisher Airlines Chairman Vijay Mallya is expected to meet the DGCA to present his plans on how to revive the company. The airline has a debt of Rs 7,057.08 crore and the financial crunch has hit its operations with dozens of flights being cancelled.

The US markets posted some gains on Monday supported by the news of Apple's dividend plans and US housing data. Apple announced it would start paying a quarterly dividend in its fourth quarter, which runs July through September. Also, US home builders’ confidence in the housing market held steady in March after five consecutive monthly gains. The Asian markets are trading mixed with some of the indices suffering cut of over half a percent. The Chinese market was witnessing maximum pressure after the country increased gasoline and diesel prices for the second time in less than six weeks. Hang Seng was trading lower due to decline in consumer-related stocks.

Back home, what initially appeared to be a lull after the storm in the early hours of trade eventually turned out to be yet another day of mayhem for the Indian stock markets which got brutally trounced by over a percentage points on first trading day of the week. Friday’s brutal rout in Indian equity markets got extended in Monday’s session as the benchmark equity indices kept searching for a bottom after investors resorted to relentless selling pressure across the board.  Market participants squared off hefty positions from the rate sensitives, Power and Capital Goods counters, dragging the frontline indices closer to the psychological 17,250 (Sensex) and 5,250 (Nifty) levels. However, investors continued to pile up positions in defensive FMCG which surged over 1% gains while some individual names like M&M, Sun Pharma and metal stocks like Hindalco and Jindal Steel managed to go home on appositive note.  After the disappointing federal budget 2012-13, market participants have now set their eyes on RBI’s quarterly monetary policy review which are scheduled to be held in April. Investors are hoping for some monetary easing which would ease the tight liquidity situation in the Indian economy. Sentiments also remained somber in the session since investors squared off positions from most counters after global rating agencies like S&P’s and Moody’s cautioned that India’s budget for the fiscal year ending March 31, 2013, weakens the government’s credit profile, citing concerns over a clear roadmap or specific policies to address fiscal constraints. Moreover, index heavyweight Reliance Industries too exerted pressure on the frontline indices as it plummeted over 2% after reports showed the largest gas fields in its KG-D6 block have hit an all-time low production of about 28 million standard cubic meters per day as the firm shut six wells due to water and sand ingress. Meanwhile, India’s Consumer price inflation, in line with the WPI, quickened in February to 8.83% on account of higher prices of protein based items and edible oil products, dampening investors’ morale. Along with the spike up in international crude oil prices which are trading at elevated levels, the sovereign bond yields too went up post rise in inflation numbers which stoked worries among investors. Finally, the BSE Sensex shaved off 192.83 points or 1.10% to settle at 17,273.37, while the S&P CNX Nifty plunged by 60.85 points or 1.14% to close at 5,257.05.