Markets to make a soft start amid sluggish global setup

The Indian markets once again witnessed a choppy trade in the last session and despite showing some signs of recovery ended with cut of about a quarter percent. Traders overlooked some good earnings amid global concerns. Today, the start is likely to remain soft on sluggish global setup. Traders will be concerned with SBI report stating that Credit growth in the country is unlikely to revive "materially" in near term as demand conditions are still acting as a laggard. The yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. The monthly index, however, jumped to 50.3 in May from 46.5 in April due to increase in commercial vehicle and consumer durables sales.  Meanwhile, industry leaders just ahead of the second anniversary of the government have said that building political consensus for the goods and services tax (GST) Bill and sustaining the momentum on the ease of doing business should be the government's focus in its third year in office. Markets can see some recovery in the latter trade owing to the F&O series expiry later in the week. Traders will be getting some support with India, Iran, and Afghanistan signing the strategic Chabahar port pact.

There will be lots of important result announcements too, to keep the markets in action. Tech Mahindra, Amara Raja Batteries, Colgate-Palmolive, Omaxe, GSFC, Bajaj Finserv, Bajaj Finance, J&K Bank, Jubilant Life Sciences, MOIL, NCC, Redington India and Zee Media among many others will be announcing their numbers

The US markets made a flat close with a negative bias in last session. The trade remained mostly subdued amid trepidation about a possible June interest rate hike from the Federal Reserve. Traders were paying close attention to comments from Fed officials, lacking any major economic announcements. The Asian markets have made a weak start with most of the indices in the region snapping their two days gaining streak mulling the prospect of tighter US monetary policy as soon as next month. Japanese market has led the fall on rebound in the yen.

Back home, Indian equity benchmarks commenced the week on a sluggish note as the indices showcased an unenthusiastic performance on Monday and settled with moderate cuts of around a quarter percent. Sentiments remained down-beat  with RBI Governor Raghuram Rajan’s  statement that India should restrain itself from being ‘too ambitious’ at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth. Rajan has also said that Indian economy has certainly picked up pace in growth, but certain sectors are still under stress, making the economic recovery uneven. Besides, prospects of early interest rate hike by the US Federal Reserve in June and slip in crude oil prices also hurt sentiments. However, the downside risks for the frontline indices was limited by reports that India’s net FDI flows are expected to rise further this fiscal to $38 billion on emergence of some ‘positive signs’ such as regulatory easing in select sectors and reform measures initiated by the government. Net FDI flows in 2015-2016 stood at around $36 billion as against $31 billion for 2014-2015.  Going ahead, volatility is to be seen on the bourses as traders will roll over positions in the futures & options segment from the near-month May series to June series. Last batch of quarter results, progress of monsoon, trend in global markets, foreign institutional investor stance and movement of rupee and crude oil will also dictate trend this week.  On the global front, Asian equity markets ended mostly higher on Monday, while  European markets traded in red in early deals. Back home, the benchmarks though got off to a boisterous start as investors were largely influenced by the supportive leads from Asian markets. Some support also came with Finance Minister Arun Jaitley’s statement that India offers a good opportunity for global investors because of its strong growth when the world economy is struggling. He also said good monsoon forecast, political reform process and low current oil prices were the key drivers of economic growth, while also pointing out that India had also benefited from the decline in prices. Finally, the BSE Sensex ended lower by 71.54 points or 0.28% to 25230.36, while the CNX Nifty dropped 18.65 points or 0.24% to 7,731.05.