Markets to make a cautious start on sluggish global cues

The Indian markets suffered severe loss in last session and benchmarks lost over a percent, reacting to the weak macro data and sluggish global cues. Today, the start is likely to be soft-to-cautious on mostly listless trade in other regional markets. Traders will also be reacting to IMD’s latest forecast of a likely late arrival of monsoon on the Kerala coast.  Also, there will be some concern in the market with a industry body FICCI’s survey that growth of India's manufacturing sector may decelerate during June quarter due to factors like bleak export outlook, poor demand and high cost of borrowing. It also stated that hiring outlook for the sector also looks unpromising. However, there will be some support and recovery in latter trade with Economic think-tank NCAER projecting India's economic growth rate to improve marginally to 7.7 percent in 2016-17 against the backdrop of IMD's forecast of better monsoon rains this year. On the sectoral front, some buzz can be seen in the banking stocks, as the Finance Ministry’s annual report, attributing mounting bad loans to economic sluggishness has said gross non-performing assets (GNPAs) of banks could soar to 6.9 per cent by March 2017 in a “severe stress scenario”.

There will lots of important earnings announcements too, to keep the markets in action. Strides Arcolab, Shasun, JK Tyre, Petronet LNG, NBCC, TRF, Mangalam Cement, Tata Coffee, BF Utilities and Gujarat Fluorochemicals, among others are scheduled to announce their results today.

The US markets ended sharply lower in last session, the trade remained volatile as strong US retail sales data rekindled talk that the Federal Reserve could more quickly lift interest rates.  Most of the Asian markets too were trading in red, tailing decline on Wall Street and soft Chinese economic data released over the weekend, though the Japanese market rallied in early trade on bargain-hunting following a string of good corporate earnings.

Back home, Indian markets suffered severe drubbing on Friday, weighed down by weak set of macro data and sluggish global surroundings. The benchmarks which had shown a terrific performance just a day ago remained under pressure from the very beginning amid weak global cues. Though, the start was in red but the initial trends showed that markets may resist any sharp fall despite getting twin disappointment of India's industrial production growth slowing to 0.1 percent in March as compared to 2.5 percent during same month last year, and retail inflation inching up in April to 5.39 percent, compared to 4.83 per cent in March. But as the trade progressed the markets started losing momentum and by the mid of the session completely lost their way with both the major indices losing over a percent each. The rupee weakness added pressure to the market slump, Indian rupee sliding for the third straight day lost substantial ground against the US dollar on fears of foreign outflows. On the global front, the Asian markets followed the US trend and made a weak closing, while the European markets too made a soft start. Back home, markets ended the dismal day of trade on a weak note with Sensex losing its crucial psychological level of 25500, while Nifty just managing to hold the 7800 mark. Markets, apart from the macro data remained jittery with some other developments like the Reserve Bank of India (RBI) proposing to raise provisioning and risk weights for fresh loans given to highly leveraged companies. In order to discourage banks from lending to such companies, which are said to have caused a high concentration of credit risk in the banking sector. In other development, acting upon recommendations of the Special Investigation Team on black money, market watchdog Sebi plans to tighten due diligence requirements for issuance and transfer of controversy-ridden P-Notes and put the onus on investors to ensure compliance with anti-money laundering law. Finally, the BSE Sensex plunged by 300.65 points or 1.17% to 25489.57, while the CNX Nifty lost 85.50 points or 1.08% to 7,814.90.