Markets likely to get a cautious start, may see some recovery in latter trade

The Indian markets ended the last session and the March F&O series on a weak note, though the trade remained volatile and the benchmarks covered some ground in last hour but could not manage a close of green. The series proved to be the weakest one since November with indices losing about six percent. The confusion over GAAR persisted and forced investors to book profit. Today, the start is likely to be flat-to-cautious and some recovery may be seen in later part of the day. There is a positive news that can support the markets, core industries output grew 6.8 percent in February from a year earlier, sharply higher than the upwardly revised annual growth of 0.7 percent in the previous month. Considering that the eight infrastructure industries weightage constitute of 37.90 per cent in the Index of Industrial Production (IIP) the overall industrial growth during February, 2012, can be expected to be significantly better. Market participants will also be watching the movement of rupee and the debt markets where the Reserve Bank announced that it will buy Rs 10000 crore worth of bonds from the market via open market operations.

The US markets made a mixed closing on Thursday as the news from the economy front too remained mixed. While, on one hand government's third read on GDP growth in the fourth quarter of 2011 remained unrevised at 3%, on the other, weekly initial jobless claims ended March 24 fell by 5,000 to 359,000 but less than expected 350,000 claims. The Asian markets have started mostly in green, however some indices including Japanese Nikkei is trading marginally in red as the nation’s industrial production unexpectedly fell 1.2 percent in February from a month before.

Back home, Indian stock markets snapped the March series futures and options contract expiry session on a sluggish note with moderate cuts of around one third of a percent. Despite registering their first negative close since November 2011 in the March series, the frontline indices still have amassed around twelve percent gains since the start of 2012. The expiry session turned out to be an extremely volatile one and the markets even registered third highest trading volumes in the day. The benchmark equity indices went on to stage a swift recovery in the second half of trade on Thursday after suffering hefty pounding through the first half. The key gauges even breached the psychological 5,150 (Nifty) and 16,950 (Sensex) levels in the early noon session as selling pressure got aggravated after the negative opening of European markets which extended their declining momentum for third straight session on growing worries over global economic slowdown. The Asian peers too remained in somber mood as investors at large took to hefty risk aversion amid reports that new orders for US durables increased only modestly in February, while a gauge of future business investment also fell short of expectations, spurring qualms over the pace of recovery in the world's largest economy. However covering of hefty short positions that got build through the series, in the late hours of trade, ensured that the benchmarks recover over a percentage points from the low points of the day. Meanwhile, reports that India's core sector industries' output grew 6.8% year on year in February provided some solace to sentiments. It had grown by 6.4% in February 2011. The growth is significantly higher than the average 4.4% seen during the financial year so far (April to February). Investors were seen squaring off hefty positions from the Capital Goods counter after the core sector growth numbers were released and the index slumped over one and half a percent being top laggard in the space. The IT and defensive FMCG counters too went home with notable losses. On the flipside defensive - Healthcare pocket along with the Consumer Durables and Auto counters settled on a positive note. On the F&O front, Nifty and Sensex for the March series went on to halt the three series gaining streak and registered their first negative close since November 2011 by plunging around 6% each. Finally, the BSE Sensex lost 63.01 points or 0.37% to settle at 17,058.61, while the S&P CNX Nifty declined by 15.90 points or 0.31% to close at 5,178.85.