Markets to make a somber start on weak global cues

The Indian markets despite some choppiness in the final hours managed to end the last session with decent gains. Today, the start is likely to be a bit somber on weak global cues and the markets may lose some strength in early trade, on concern of a Fed rate hike after some officials suggested that two rate hikes may be warranted this year. There will be buzz in the markets with the government forming a five-member committee under former revenue secretary N K Singh to review the working of the 12-year old FRBM Act and examine the feasibility of a fiscal deficit range instead of a fixed target. Some support to the markets can come with a Nielsen survey that Indian consumers were the most confident in the world in terms of job prospects, personal finances and concerns in the first quarter of 2016 with their confidence index touching a nine-year high during the period. There will be buzz in the PSU banking stocks, especially in State Bank of India (SBI) and its listed associate banks after the central board of SBI passed a resolution to seek the government’s nod to start negotiating the merger of its five subsidiary banks and Bharatiya Mahila Bank (BMB) with itself.

There will be lots of earnings announcements too to keep the markets in action. PNB , JSW Steel, Torrent Pharma, Tata Communications, Prabhat Dairy, Corporation Bank and Balkrishna Industries are among many to announce their numbers.

The US markets suffered sharp sell-off in last session, offsetting the rally that was seen in the previous session, with the Dow falling to its lowest closing level in well over a month. Traders even ignored Labor Department report showing a slightly bigger than expected increase in consumer prices in the month of April. The Asian markets have made mostly a lower start, as better-than-expected data in the US and Japan fueled speculation their central bank policies will be less accommodative than was previously envisaged. While the Japanese market was trading higher after growth of the nation beat estimates, lessening need for stimulus.

Back home, Indian benchmarks despite getting a promising start and surging to over one percent in second half of the session failed to maintain the lead and ended with gain of just over quarter a percent. Sentiments were sanguine from the start of trade with Finance Minister Arun Jaitley exuding confidence in getting the GST Bill passed in the upcoming monsoon session. Jaitley said that he has spoken to the chief ministers of all states, including those ruled by the UPA and the Congress, and they are a “strong supporter” of the idea. Besides, exit polls which indicated BJP emerging victorious in the Assam assembly polls also boosted investor sentiment. The actual results would be declared on May 19, 2016. Market participants also got some encouragement with the India Meteorological Department’s announcement that the late arrival of the monsoon will not delay crop sowing and that rains are expected to make rapid progress after their arrival around June 7, 2016. Firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments.  However, investors remained cautious on the report that inflation based on wholesale prices accelerated in April for the first time in 18 months, reinforcing the likelihood that the Reserve Bank of India (RBI) will hold interest rates steady next month. On the global front, Asian markets ended mostly higher on Tuesday, while the European stock markets too started the session on firm note. Back home, the markets moved higher in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The frontline indices soon gathered momentum and traded with over half a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels. However, an intense profit booking in dying hour of trade ensured that the key indices shut shops off the intraday highs. Finally, the BSE Sensex surged 103.34 points or 0.40% to 25756.57, while the CNX Nifty rose 30 points or 0.38% to 7,890.75.