Markets to get a soft start on sluggish global cues

The Indian markets despite a good start could not keep the momentum going and lost its way to close marginally lower in last session, Auto, Power and capital goods counter were the major drag. Today, the start is likely to be soft-to-cautious as there are not much supportive cues on the upside. Traders will be closely eyeing the movement of rupee which has plunged to a four-month low of 53/$ on Wednesday, capital inflows have slowed and it is being suspected that the Indian currency may touch new lows. Meanwhile, as the date of May 7 is nearing, when the government notifies the controversial general anti-avoidance rules (GAAR), volatility too cannot be ruled out. Markets have been stuck in a narrow band of 5150-5400 since April on concerns of India's worsening external position and lack of fiscal reforms.

Sugar stocks are likely to rejoice today, as government on Wednesday removed the cap on sugar exports and placed the commodity under the open general licence category like wheat and rice. The government has also announced to appoint a committee under the chairmanship of Prime Minister's Economic Advisory Council ( PMEAC) chairman C Rangarajan to look into the distribution of additional food grains through ration shops and open market sales scheme (OMSS).

Apart from this there will be lots of important result announcements to keep the markets buzzing. Aventis Pharma, Finolex Cables, G E Shipping, KEC International, Marico, NDTV and Piramal Health are among the many to announce their numbers today.

The US markets made a mixed closing on Wednesday, though the losses were modest for some of the indices but investors seemed pondering over a disappointing private-sector employment report ahead of Friday’s official April jobs data. Payroll processor Automatic Data Processing reported a much weaker-than-expected increase of 119,000 workers added by US companies in April on a seasonally adjusted basis. Most of the Asian markets have made a soft start as China’s services industries slowed and the US and European employment reports highlighted weakness in the global economy.

Back home, Wednesday’s trading session turned out to be absolutely fruitless for stock markets in India as the benchmark equity indices failed to sustain the gains they amassed in the early part of session. The frontline gauges remained range bound for through the day but drifted to lower levels in the last leg of trade to settle with trivial losses. Coming after a day’s holiday, the benchmark gauges got off to a promising start, tracking sanguine cues, which the Asian markets exhibited as sentiments got supported by the unexpectedly strong manufacturing reports from the US and China, the two top economies of the world, which lifted risk appetite of investors. Earlier in the day, market participants traded with conviction after telecom major Bharti Airtel announced its fourth quarter earnings, which were unexpectedly better than the street’s estimates. In addition the FMCG bellwether HUL and leading two-wheeler maker Hero Moto too announced quarterly results which were better than expected and supported sentiments. Cable companies including Hathway and WWIL rallied in the session after TRAI’s notification on digitizing cable TV distribution recommended a mandatory ‘carriage fee’ - or, the money that broadcasters have to pay to cable companies for them to carry their channel. However, the upside for the benchmark gauges was capped since a HSBC survey indicated that India's manufacturing sector inched up in April, supported by rising order books, but slower output growth and rising price pressures dampened sentiment. Also, another data showed growth in India’s eight core industries' slowed down to 2% in March as against 6.5% in the same month last year reflecting a slowdown in the economy. Besides, market men were also seen squaring off hefty positions from the rate sensitive Automobile counter, which plunged over one and half a percent after heavyweights like Maruti and Tata Motors reported disappointing monthly sales numbers. Power sector remained another laggard in the session as it went home with over a percent cut after majors like Tata Power and NTPC suffered heavy pounding. Finally, the BSE Sensex lost 16.90 points or 0.10% to settle at 17,301.91, while the S&P CNX Nifty declined by 9.00 points or 0.17% to close at 5,239.15.