Markets to see some recovery after last session’s sharp plunge

Indian markets furthered the declining momentum in the last trading session and closed with the biggest cuts seen in two weeks on largely across the board position squaring amid somber global cues. Today the domestic bourses markets are likely to start on a flat to positive note as investors would resort to some short covering a day after severely pounding the equity indices. Markets are likely to remain on the edge as uncertainty loomed over the GAAR provisions amid reports that FIIs have asked the government to remove the applicability of GAAR to foreign portfolio investment. Besides, the textile stocks are likely to remain in focus in the session as government has refused to lift the ban on cotton exports while allowing traders to fulfill their pending contracts of about two million bales of the commodity. Meanwhile, a RBI data showed Indian companies raised $2.6 billion through external commercial borrowings and foreign currency convertible bonds (FCCBs) in February marginally lower than $2.7 billion mopped up in January.

Moreover, Tata Steel may remain in limelight as the world's seventh-largest steelmaker has opined that sales from its Indian operations rose 3.3% to 1.77 million tonnes in the January to March quarter while IGL too will be in focus as after the Gas boards’ orders to cut rates, charges for CNG and PNG to Delhi consumers, the firm is likely to challenge the directive.

The US markets settled on a disappointing note on Monday with the Dow and S&P 500 furthering their declining streak for a fourth straight session as investors reacted to last week's disappointing jobs report, which spurred worries over the US economy's recovery. The Asian markets have got off to a mixed opening as some markets have recovered after the sharp decline in previous session. Sentiments in the region remained cautious as the Chinese markets declined ahead of the Chinese trade data announcement while the Japanese bourses climbed before a central bank meeting.

Back home, Indian bourses started the fresh week on a discouraging note with the benchmark equity indices collapsing over one and half a percentage points and slipping below crucial levels. The frontline indices got off to a gap down opening and never really recovered through the session. The benchmark gauges have extended their declining run for second straight session as investors continued to book hefty profits across the board. The 50-share Nifty failed to cling on the important psychological 5,250 levels as its southbound journey halted only with the day’s close as sentiments not only got undermined by the dismal cues from global markets but also due to lingering uncertainty over the GAAR provisions, which meant that foreign liquidity that drove Indian equities higher for the better part of this year has started moderating. Market participants also lacked conviction to open fresh bets as they await a lot of domestic indicators which are scheduled to come to the fore in the ongoing eventful week. The key events which would remain at the top of the minds of investors this week will be IIP data for February, WPI Inflation numbers for March, RBI’s policy stance in its quarterly monetary policy review and IT bellwether Infosys’ earnings announcement for the January-March quarter. Marketmen after an extended weekend squared off hefty positions from the Metal counter tracking the global weakness in commodities while Capital Goods pocket too bore the brunt of hefty selling pressure ahead of IIP data. The interest rate sensitive Banking shares also sank amid reports that the credit deposit (CD) ratio stood at 78.1% in March 2012. The incremental CD ratio surged to 138% in March 2012 from 76% in December 2011, the highest level touched since 1970s. On the flipside only the defensive Healthcare sector kept its head above the water with around a quarter percent gains after majors like Ranbaxy Labs and Dr Reddy's Labs surged in the session. On the global front, sentiments in Asia got undermined as US employers added fewer jobs than forecast, damping outlook for a recovery in the world’s biggest economy. Besides, reports that China’s consumer price index (CPI) exceeded forecasts as it came in at 3.6% y-o-y in March also undermined investors’ morale. Finally, the BSE Sensex lost 263.88 points or 1.51% to settle at 17,222.14, while the S&P CNX Nifty declined by 88.50 points or 1.66% to close at 5,234.40.