Markets likely to make a soft start on weak global cues

The Indian markets extended their gains for third day with major indices gaining over half a percent. The markets inched higher amid positive global setup and with some encouraging development from the home front. Today, the start of the last session of truncated week is likely to be in red tailing the weakness in the global markets. There is likely to be buzz in the power sector as the Centre issued a Presidential directive to Coal India to sign fuel supply agreements (FSAs) with power producers, assuring them of at least 80 per cent of the committed coal delivery after it failed to meet the March 31 deadline fixed by the Prime Minister’s Office on entering agreements with power producers facing fuel crunch. However, the power finance companies might see some pressure as after four days of announcing a power tariff hike for the first time in nine years; the Tamil Nadu government announced a partial rollback for domestic consumers.

Meanwhile, it has been clarified by a finance ministry official that Foreign institutional investors based in Mauritius will not be required to pay capital gains tax in India if they have 'substantial commercial interest' in the island nation.

The US markets got a halt to their rally mood on Tuesday after Federal Reserve downplayed the prospects for more quantitative easing. The Fed’s March meeting minutes noted recent signs of slightly stronger growth but remained cautious about a broad pick up in US economic activity, focusing heavily on a still elevated jobless rate. The minutes suggested the appetite for another dose of quantitative easing, so-called QE3, has waned significantly. The Asian markets have made a dismal start with most of the indices trading in red; the pessimism entered in the region following US where Federal Reserve minutes showed central bankers saw no need for more stimulus unless the economy weakened. The Japanese markets was suffering the most with the development and partially by the report that Japan’s biggest opposition party said it will reject Prime Minister Yoshihiko Noda’s central bank nominee.

Back home, Stock markets in India sustained the joy of closing in the positive territory for the third successive session on the penultimate day of the first week of April after the frontline equity indices climbed around three fourth of a percent and settled around the psychological 17,600 (Sensex) and 5,350 (Nifty) levels. Domestic bourses got off to a gap-up opening in the morning and remained in fine fettle through the session as market participants showed largely across the board buying interests. Though some bouts of profit booking surfaced in the late hours after the benchmark indices touched the highest point in the day, however the key indices managed to regain some lost ground and settled around the key technical levels by the end.  Investors added hefty positions in the Capital Goods counter as the power equipment maker BHEL’s encouraging provisional earnings reading raised optimism about profits in the capital goods sector. The heavyweight, BHEL led the gainers in Capital Goods counter after reporting provisional net profit at Rs 6,868 crore for the financial year 2011-12, the government too has decided to put on hold plans to sell a stake in the state-run company.  The Oil & Gas, Metal and rate sensitive Bankex counters too witnessed hefty buying and supported the frontline indices. Moreover, shares from the Aviation space including SpiceJet and Kingfisher skyrocketed in the session after the airlines filed application with the Director General of Foreign Trade (DGFT) seeking permission to directly import aviation turbine fuel (ATF). Shares from the Automobile and Cement counters too kept buzzing in the session on announcing monthly sales numbers while all media stocks including NDTV, Network 18, etc witnessed sudden spurt after investors showed kneejerk reaction to reports that government may clear FDI cap in broadcasting services and increase the limit to 74% from current 49%. However, the upside in local markets was capped as bond yields spiked after traders dumped bonds to make way for the heaviest weekly debt supply totaling $3.54 billion in the holiday-shortened week. While there was some profit booking evident in the defensive Healthcare and IT pockets, which closed with moderate cuts. Finally, the BSE Sensex gained 119.27 points or 0.68% to settle at 17,597.42, while the S&P CNX Nifty rose by 40.60 points or 0.76% to close at 5,358.50.