Markets likely to get a soft start on sluggish global cues

The Indian markets suffered sharp cuts on the last trading day; the start of the official earnings season for the India Inc was depressing with Infosys annual guidance remaining much below expectation. Barring the defensive sectors all others remained bit under weather, while the IT index suffered sharp cuts of over eight percent. Today, the start is likely to be soft-to-cautious with all eyes on the monthly inflation data and RBI’s monetary policy announcements tomorrow, where there is a widely expected rate cuts hope this time. However, RBI Governor Duvvuri Subbarao has said that India’s deficits and short-term debt levels are 'disturbing,' but it is not facing a repeat of a 1991 balance of payments crisis. Though there will be some cheers for the aviation stocks as after three rounds of price hike, state-owned oil companies have announced a marginal reduction in jet fuel prices by about Rs 170 per kilolitre. Also, companies such as Castrol India, CRISIL, Jay Bharat Maruti and Mindtree etc will be announcing their numbers today and will keep the markets buzzing.

The US markets suffered sharp plunge on Friday with the disappointment of weaker than expected growth in Chinese economy, a day ahead the markets moved higher expecting good news from China. Also the report of consumer sentiment declining in early April on worries about current economic conditions took the major indices down by over a percent. The Asian markets have made a weak start with most of the indices are trading lower by half to one percent. Apart from the US concerns the regional worries too have gripped the investors as Bank of Korea cut its economic growth estimate and concern grew that Europe’s debt crisis is deepening with the rise in Spanish bond yields.

Back home, last trading session of the week turned out to be a daunting one for stock markets in India, which not only went on to erase all the good work done in the previous session but also halted the two week gaining streak with large cuts of around two percent. The frontline equity indices went through a volatile session amid a slew of local as well as global headwinds and settled around the psychological 5,200 (Nifty) and 17,100 (Sensex) levels after suffering around one and half a percent cuts on large volumes.  The markets which resiliently weathered the shocking start of the fourth quarter earnings season post the discouraging earnings and guidance by index bellwether Infosys in the morning session, flattened out completely in early noon trades. The key gauges could not capitalize further on the momentum since sentiments in the local markets got influenced by the pessimistic cues that the European markets were exhibiting. On the domestic front, government data showed although exports beat the government’s target, India's trade deficit shot up more than 50% in the 2011-12 fiscal year and is seen at $185 billion, higher than a revised estimate, mainly on account of higher crude import bill. The software and technology counters suffered brutal assault in the session amid expectations that the upcoming results season, which kicked off by technology giant Infosys’ gloomy guidance, may not bring the much-needed cheer to the IT sector amid uncertainty in the business environment for Indian outsourcing companies. The rate sensitive Bankex and Realty counters, which gained some ground on RBI rate cut hopes, too plunged around a percent on profit booking.  However, stocks from the Aviation sector skyrocketed on reports that the issue of allowing foreign airlines to buy up to 49% in Indian carriers will come up before the Cabinet at its next meeting. Moreover, the broader markets which showed resilience for most part of the session settled on a weak note with over half a percent cut but outperformed their larger peers. Finally, the BSE Sensex shaved off 238.11 points or 1.37% to settle at 17,094.51, while the S&P CNX Nifty plunged by 69.40 points or 1.32% to close at 5,207.45.