Markets likely to make a flat start of the new fiscal

The Indian markets went for a tremendous rally on the last trading day of the fiscal and the benchmarks surged by over 2 percent. Finance minister’s statement on P-notes saying that government will issue clarification on its position on taxation of investments from overseas soothed the worries. Today, the start is likely to be on a flat-to-positive note though, FM has given clarification but with the start of new financial year concerns still persist over the government's broader proposals to tax foreign investors. It’s a truncated week with just three days of trade. Marketmen will also be eyeing the movement in the rupee after it suffered worst fall in four months. The Aviation stocks are likely to be under pressure as the oil marketing companies have raised the ATF prices on 31st March by 3%, the third time in the month. Jet fuel constitutes over 40% of an airline's operating cost and the hike in prices will add to the burden of the cash-strapped airlines. Meanwhile, the auto companies are likely to rejoice with record sales in month of March on the back of customers advancing their purchases due to fears of a post-Budget price hike.

The US markets though closed mixed on last trading session but it was one of the best quarters since 1998. The traders’ sentiments were boosted by the better-than-expected rise in consumer confidence and spending. The Asian markets after a decent start following biggest quarterly gain since 2010 are now trading mixed. The Chinese market is trading higher on report that country’s Purchasing Managers’ Index climbed to 53.1 in March from 51 the previous month.

Back home, Indian stock markets staged a terrific rally on the last trading day of the financial year 2011-12 as the benchmark equity indices kept gaining from strength to strength and there appeared absolutely no evidence of profit booking. The fresh futures and options series got off to a promising start and the frontline indices continued to build on the momentum after concluding the March series with around six percent decline and also registering the first negative close since November 2011. The benchmark equity indices vivaciously rallied over two percentage points and finished around the psychological 5,300 (Nifty) and 17,400 (Sensex) levels. The key gauges’ skyward journey only ended with the close of trade as sentiments got filliped on the back of the optimistic European market which halted the three session declining streak and rebounded on bargain hunting ahead of a two-day meeting of European finance ministers in Copenhagen. On the domestic front, market participants drew solace after Finance Minister Pranab Mukherjee put to rest all the uncertainty surrounding the tax liability on P-notes and stated that government will issue clarification on its position on taxation of investments from overseas, amid FIIs expressing concern on the proposed anti-tax avoidance rules in due course. He opined that there will be no tax liability on Participatory Note holders and the intention of government is not to harass genuine investors. Hefty buying interests was evident in the rate sensitive Banking and Real Estate counters after the Indian central bank in its move to improve liquidity situation in the system and check the appreciation of rupee, announced Rs 10,000 crore worth of bond buying program. This is the first instance of the RBI’s buying bonds in the last day of the fiscal year. Oil marketing companies too rallied sharply in the session amid hopes that the government would allow hiking prices of petrol this weekend. The OMCs are also pushing for raising prices of other petroleum products like diesel and LPG. Though there appeared no sectoral laggards some individual names like Jindal Steel and Sun Pharma failed to keep their heads above the water and closed with losses. Finally, the BSE Sensex jumped 345.59 points or 2.03% to settle at 17,404.20, while the S&P CNX Nifty climbed by 116.70 points or 2.15% to close at 5,295.55.