Markets likely to get a cautious start of the new week

The Indian markets after a decline on Friday tried to recover some ground on Saturday’s special trading session. Today, the start of the truncated week is likely to be flat-to cautious, it’s a earnings heavy week so the traders will be eyeing the performance of different corporate for taking cues. Investors are likely to draw some encouragement with a survey conducted by the Confederation of Indian Industry showing that India's business confidence has improved from the previous quarter, however it also pointed that concerns over stagnancy in reforms and rising cost of finance and raw materials still remain. The survey pegged the CII Business Confidence Index for the first quarter of the current fiscal (April-June) at 55, as against 52.9 in the last quarter of 2011-12. The retail related companies are likely to see some action as the government has stressed its commitment to allow up to 51% foreign direct investment (FDI) in multi-brand retail trade after drumming up necessary consensus. The power sector too is likely to remain buzzing as Tata Power has independently secured a favourable legal opinion over the legality of a government decision allowing Reliance Power to divert surplus coal from the captive mines associated with its Sasan ultra mega power project.

Also there are lots of important result announcements scheduled for the day. Bank of India, Dabur India, Exide Inds, Godrej Consumers, Hindustan Motors, JSW Energy, Procter & Gamble, Punj Lloyd, Titan Inds, Vijaya Bank and United Phosphorus are among the many to announce their numbers today.

The US markets extended their gaining streak and S&P closed above 1400 mark for the first time after nine years. Though, the economic news remained mixed but better corporate earnings encouraged the investors for going bigger bet. All the Asian markets are not trading today but the ones who are trading have mostly made a positive start of the new week. South Korean Kospi Index was trading in green as the country’s manufacturers’ confidence increased to the highest level in nine months.

Back home, Indian markets despite a positive start could not held up to their gains and lost momentum in the second half, though they managed to cover up in last hour and ended the Friday’s session with token gain. But at one point of time the benchmarks looked losing their important psychological levels of 17000 (Sensex) and 5150 (Nifty). Earlier the start of the day was flat but positive, the global cues were mixed, as while the US markets closed higher overnight, the Asian markets lost steam after a positive start. However, the European markets after a weak start showed sign of recovery and entered the green, helping the local markets to move up. Initially the domestic investors were encouraged with Indian Meteorological Department statement 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. And investors took it as a positive cue, as the normal monsoon will help curbing inflation. But the mixed earnings announcement kept the markets in tizzy and turned the trade volatile, while the ICICI Bank surprised the street with its better than expected numbers, the second largest lender of the country reported 31.1 percent rise in quarterly profit on the back of strong loan growth and higher treasury and fee income. On the same time, Hindustan Construction (HCC) came up with a dismal number, reporting greater than expected net loss for the final quarter, the company reported net loss of Rs 54.17 crore for the quarter. On the sectoral front, the consumer durables (CD) emerged as the top gainer with stocks like Titan Inds and Rajesh Exports moving higher by over 2 percent each, while the Information Technology (IT) too witnessed value buying and snapped the session higher by over a percent. The one sector that despite buzzing throughout the day closed marginally lower was banking, weak performance by some private sector banks along with the sector heavy weight State Bank of India weighed on the overall performance. Axis bank ahead of its numbers remained in jubilant mood garnering gains of over a percent. 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. Indian markets had a special short trading session on Saturday which proved a bit soothing one with indices gaining over a quarter percent. All the sectoral indices closed in green and PSU counter remained the top gainer. Finally, the BSE Sensex gained 53.09 points or 0.31% to settle at 17,187.34, while the S&P CNX Nifty rose by 18.40 points or 0.35% to close at 5,209.00.