Markets to make a soft-to-flat start on sluggish global cues

The Indian markets suffered sharp cuts in last session and the major averages lost about a percent. Today, the start is likely to remain soft tailing the weak global cues and traders will be eyeing the Industrial production data slated to be announced later in the day, the IIP for March 2016 was just 0.1 per cent higher as compared to the level in March 2015. There will be some buzz in tobacco companies, as the NITI Aayog has raised certain issues on the proposal to completely ban foreign direct investment (FDI) in the tobacco sector, as the ban would eliminate the possibility of indirect flow of overseas funds to the tobacco sector. The railways stocks too will be in action on Railway Minister Suresh Prabhu’s announcement that the Indian Railways will invest $140 billion over the next five years in infrastructure and improving the mobility of its services. The aviation stocks too may continue their jubilation after the government announced that it was not looking at capping airfares and would prefer to leave it to market forces, also as the crude oil cooled off after three days of rally.  

The US markets ended modestly lower in last session, as traders booked recent profits amid renewed concerns about the domestic economy after a report from Commerce Department showed that wholesale inventories advanced 0.6 percent in April. Though, the jobless claims came in lower than last week. The Asian markets have made mostly a lower start, with some of the indices trading lower by about half a percent, led by the Japanese market with strengthening yen.

Back home, Indian markets after witnessing consolidation in the previous session, succumbed to intensified selling pressure on Thursday that dragged the benchmarks down by around a percent. Sentiments remained down-beat with the report that the World Bank lowered India’s growth projections by 0.2% to 7.6% for 2016-17 and 7.7% in 2017-18, citing the drag by exports on economic activity. Besides, concern over rising crude oil prices, which are hovering near their one year highs, too weighed down sentiments. Rise in crude oil prices will adversely impact India's fiscal deficit situation and will increase fuel price inflation, as India imports about 80% of its crude requirements. Further, some market participants remained on the sidelines and refrained from any buying activity ahead of industrial production data for April which is scheduled to be released on Friday. Investors failed to get any sense of relief with Prime Minister Narendra Modi’s statement that his dream was to economically empower every Indian by 2022, the 75th anniversary of India's Independence Day. Meanwhile, Auto stocks came under selling pressure on report that domestic passenger car sales dipped by 0.86% to 158,996 units in May from 1,60,371 units in the year-ago month. However, metal & mining stocks showed some realization as copper prices rose in global commodity markets. Infra stocks too gained, as the governing council of National Investment and Infrastructure Fund chaired by finance minister Arun Jaitley reviewed progress of operationalising India’s maiden sovereign wealth fund NIIF, including the selection of its CEO and projects shortlisted for making initial investments. The government has proposed a corpus of Rs 40,000 crore for NIIF, which will invest in infrastructure projects. On the global front, Asian markets ended mostly lower on Thursday, while the European shares too opened lower. Back home, the local benchmark indices started the session on a somber note, as investors were largely influenced by the daunting sentiments prevailing in Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 257.20 points or 0.95% to 26763.46, while the CNX Nifty dropped 69.45 points or 0.84% to 8,203.60.