Markets likely to get a flat-to-positive start

The Indian markets closed marginally lower to snap the April F&O series flat. It was a choppy session with traders rolling over their positions to next series. Today, the start of the new series is likely to slightly better as the US markets have given a good lead. Also, the investors will be comforted with Indian Meteorological Department stating that rains during the June-September season are likely to be 99 percent of the long-term average. Monsoon rains are vital for agricultural output and economic growth, irrigating about 60 percent of country’s farmland. After the outlook downgrade by S&P, RBI too has been seen comforting the markets, saying the country's financial system is strong and sometimes ratings are discounted by markets. Meanwhile, the banking sector is likely to keep buzzing as the central cabinet has cleared banking laws (Amendment Bill 2011). It also approved increase of voting rights from 10% to 26% for private-sector banks. However, for buying equity stake of above 5%, approval of the central bank will be mandatory. The bill is scheduled to be introduced in the current session of the parliament.

There will be lots of result announcements to keep the markets buzzing. ICICI Bank, Axis Bank, Hexaware Tech, Indiabulls Financials, Siemens, Mahindra Lifespace, Jindal Steel, Thomas Cook etc. are among the many to announce their numbers today.

The US markets went for a late hour rally with all the major indices gaining above half a percent, mainly pushed up by a batch of bright earnings reports and encouraging news about home sales. The National Association of Realtors reported that the number of contracts to buy homes is rising. Also, initial claims for the week ending April 21 fell by 1,000 to a seasonally adjusted 388,000 from the previous week's upwardly-revised figure of 389,000. The Asian markets after a jubilant start tailing US markets are showing consolidation and some of the indices have slipped in red. Standard & Poor’s downgrade of Spain’s sovereign- credit rating was weighing on the sentiments. Japanese market was trading flat ahead of the central bank’s monetary policy today. The country’s consumer prices rose in March. Though Bank of Japan’s inflation forecast is also due today.

Back home, the April series futures and options contract expiry day turned out to be a lackluster session for the Indian benchmark indices as the session lacked the flavor of high volatility, which typically surfaces on F&O settlement day. After registering their first negative close since November 2011 in the March series, the frontline indices resumed gaining streak in April series but could only negotiate slight gains. In the session, the frontline equity indices traded in an extremely tight range hardly budging from the psychological 5,200 (Nifty) and 17,150 (Sensex) levels. The benchmarks exhibited sideways kind of movement since the start of trade and closed with a negative bias amid uncertain market conditions. Market participants chose to consolidate their positions around previous closing levels a day after rating agencies like S&P’s and Moody’s voiced their concerns over India’s economic outlook, citing problems like policy paralysis, slow progress on its fiscal situation, as well as deteriorating economic indicators. The European markets too failed to give any direction to local markets as they traded on a mixed note ahead of a slew of quarterly earnings announcement from European majors like Deutsche Bank, Barclays and Bayer. Market participants chose to play it safe and added positions in the defensive FMCG counter while they were also seen covering short positions in the badly beaten down IT and TECk counters which closed among gainers and supported the frontline gauges by capping their losses. However, the Power pocket remained the top laggards in the space with around one and half a percent cut after ministry of environment and forests said that promoters of a thermal power plant will have to wait till the linked mine gets a stage 1 forest clearance. The rate sensitive Automobile, Realty and Bankex pockets too were among the prominent losers in the sectoral space, which capped the upside chances for domestic bourses. On the F&O front, April series Nifty and Sensex went into the consolidation mode and snapped the series on an absolutely flat note with marginal gains of less than half a percent. Besides, the broader markets too snapped the series on a weak note with the mid cap index underperforming not only its larger peers but also the Small Cap index. The Technology and Software counters remained among the prominent laggards in the series, which was countered by the sharp gains in rate sensitive Automobile counter. Finally, the BSE Sensex lost 20.62 points or 0.12% to settle at 17,130.67, while the S&P CNX Nifty declined by 13.00 points or 0.25% to close at 5,189.00.