Markets likely to start on a weak note as global cues remain unsupportive

Indian markets snapped the three day winning streak to close lower on the last day of the holiday shortened week on profit booking and weak global cues with the rate sensitive counters doing the maximum damage. Today, the domestic bourses are likely to extend their declining run as global cues remain dismal and investors also would remain cautious ahead of a lot of economic indicators to be announced this week. Markets are likely to keep buzzing as SEBI is mulling over employing various measures like launching new products in the derivatives segment and introducing no-frills trading accounts to attract new investors. Besides, the government has proposed to offload its equity in the state-run aluminum maker Nalco as part of its disinvestment programme. Also, the government is contemplating a proposal for encouraging profitable subsidiaries of PSUs to seek listing and raise funds from the capital market.

Meanwhile, the textile sector stocks are likely to be in limelight in the session, as group of ministers will meet today to discuss whether to allow additional cotton exports in the 2011-12 marketing year ending September. Also, oil stocks would be on the radar as Brent crude have plunged around a percent $1 on Monday as Iran agreed to resume talks with top world powers this week on the country's nuclear programme, raising hopes of a peaceful end to the standoff.

The US markets made a mixed closing on Thursday despite getting good jobless claims data after the European worries came on forefront, as Spain’s rising borrowing costs fueled concern that the region is failing to contain its debt crisis, which led to the European markets extending their fall for the third week, the longest losing streak since August. The Asian markets have got off to a somber opening with most major markets trading with around a percent cut. Sentiments in the region got undermined amid concerns over the slowdown in the US and lingering debt crisis in Euro-zone, denting the earnings prospects for Asian exporters. Besides, Chinese shares declined after reports showed that consumer price index (CPI), a main gauge of inflation, exceeded forecasts as it came in at 3.6% year on year in March.

Back home, stock markets in India staged an unenthusiastic performance on the last trading session of the first week of FY 2012-13 as the frontline equity gauges shed over half a percent after amassing over three percentage points in the last three sessions. The benchmark gauges, which gyrated in a narrow range on tepid volumes, drifted lower for the first time in last four trading sessions and settled around the psychological 17,500 (Sensex) and 5,300 (Nifty) levels as investors took to largely across the board profit booking. Sentiments in the session got undermined not only by the dismal cues from global markets but also from disappointing domestic economic indicators. Investors’ mood got dampened by HSBC services PMI reading, which showed that expansion in Indian services sector slowed to a five month low levels in March as optimism about the business outlook in the coming year faded to its weakest level since 2009. The HSBC India Composite Index which covers both the manufacturing and service sectors fell from February’s 57.8 to a four-month low of 53.6 in March. Meanwhile, bond yields steadied a day after spiking after traders dumped bonds to make way for the heaviest weekly debt supply totaling $3.54 billion in the holiday-shortened week. The high beta Realty index plunged over a percent after investors squared off hefty positions from the counter amid reports that the cabinet will soon consider a bill that seeks to establish the regulator for the real estate sector. The proposed regulator would make registration compulsory for property agents as well as for residential projects over 1,000 square metres or 12 dwelling units in an effort to improve transparency and accountability in the sector. The Metal and Banking pockets too suffered severe pounding and plunged about a percent. On the other hand, the Power sector remained top gainer with around half a percent gains in an otherwise weak market after the government issued a presidential decree to force Coal India to guarantee long-term fuel supply to private power firms. Finally, the BSE Sensex lost 111.40 points or 0.63% to settle at 17,486.02, while the S&P CNX Nifty declined by 35.60 points or 0.66% to close at 5,322.90.