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

The Indian markets went for heavy losses in last session, the global risk aversion raised the apprehension of FII selling, adding salt to the wounds were the railway fare rollback and CAG’s leaked report on coal block allocation. The rupee too slipped to its more than two months low putting additional pressure. Today, the start is likely to be cautious on weak global cues and the slowing economic recovery across the globe is likely to weigh. However, some recovery too can be expected , especially in the stocks that got impacted after the CAG’s report as there has been some damage control, prime minister's office stated late evening that report of India losing up to $211 billion in revenue by selling coal deposits too cheaply is 'exceedingly misleading'. The gold finance companies too may stabilize in late trade. There will be lots of scrip specific movements in the market.  Aviation minister, Ajit Singh has ruled out closure of Kingfisher Airlines and said that the ministry is still looking at the financial viability of the airlines.

Meanwhile, industry body ASSOCHAM,  has called for a hike in import duty on all steel products to 10%. Taking cognizance of the recently raised import duty on non alloy flat steel products (from 5% to 7.5%), it has stated that this does not include the alloy steel category and hence fails to address the issue holistically.

The major US markets lost over half a percent on global worries with report of Europe slipping into recession and slowing growth in China. The HSBC flash purchasing managers index, a measure of Chinese manufacturing activity dropped sharply in March to a level of 48.1 from February’s final reading of 49.6.The Asian markets have made a mixed start inching towards their biggest weekly loss on concerns of contracting European and Chinese manufacturing.

Back home, what started as a choppy session eventually turned out to be a nightmare for the Indian stock markets. After spending most part of the session consolidating around the neutral line, the benchmark equity indices took a turn for the worse in late hours of Thursday’s session as investors at large resorted to hefty profit booking after witnessing over three hundred points rally on the Dalal Street in two previous trading sessions. A combination of domestic as well as global factors led to the brutal butchery across the board. After touching the day’s highs in mid morning trades, markets kept drifting lower in afternoon trades as the newly appointed Railway minister Mukul Roy rolled back most fare hikes proposed by his predecessor. However, the markets did not showed a knee-jerk reaction to the development as it was largely on the expected lines after the sacking of former rail minister Dinesh Trivedi.  But the move has reignited worries amongst the market participants over the decision making power of the ruling Congress as they fear any decision by the government relating to hike in prices of petroleum products is likely to meet with similar fortune. The benchmark equity indices witnessed panic selling in mid noon trades as sentiments remained dismal amid a series of negative cues. Meanwhile, the buzz that Comptroller & Auditor General (CAG) has opined that the government extended undue benefits, totaling a mind-boggling Rs 10.67 lakh crore to commercial entities by giving them 155 coal acreages without auction between 2004 and 2009, kept the markets on heels. RBI rendered a big jolt to gold finance companies like Manappuram Finance and Muthoot Finance by restricting loans by these firms to 60% of the value of gold jewellery pledged as collateral. Currently gold loan companies are said to be lending as much as 75% of the gold value. Meanwhile the rupee plummeted sharply to over two month lows while bond yields went up, undermining sentiments. On the BSE, there appeared no sectoral index which could holds its head above the water while among individual heavyweights only Coal India and Hero Moto went home with gains. Finally, the BSE Sensex shaved off 405.24 points or 2.30% to settle at 17,196.47, while the S&P CNX Nifty plunged by 136.50 points or 2.54% to close at 5,228.45.