Slide for the Indian markets likely to continue; inflation data eyed

The Indian markets continued their sorrow in the last session of the passing week, which proved to be a bad one with major indices slipping far below their crucial psychological levels. Today, the start of the new week is not looking any different and the indices may make a subdued start with lots of local headwinds coming on the fore. The global condition too remains uncertain with no resolution on Greece. The telecom companies are likely to remain under pressure as the Telecom Regulatory Authority of India (Trai) has stuck to its formula for auctioning 2G spectrum to new players and justified the proposed shift of frequency at market-determined price for existing operators. The Power companies and Coal India too may remain cautious as Power minister Sushilkumar Shinde has sought Prime Minister Manmohan Singh's Office’s intervention in mandating Coal India to ink Fuel Supply Agreement (FSA) within a month in its 2009 format. Meanwhile, the PSU oil marketing companies may be in jubilant mood on buzz that they may go for a price hike after the budget session. Traders will also be eyeing the inflation numbers for the month of April. However, general expectation is that India’s inflation rate probably eased only slightly in April, held firm by food prices. Rupee movement too may guide the market movement today.

There is lots of important result announcements scheduled today. Abbott India, Adani Ports, Adani Power, Alstom T&D, Ashok Leyland, Eicher Motors, Havells India, Morepen Lab, Maharashtra Seamless, L&T, JSW Steel, IVRCL Ltd, Indraprastha Gas, Orchid Chemicals, Saregama India etc are among the many to announce their numbers.

The US markets mostly made a lower closing on the last trading day of the week, the JP Morgan revelation kept haunting the markets and the banking shares were most impacted by it, even the better than expected consumer confidence data were unable to take all the indices in green. The Asian markets have made a mixed start with some of the indices trading lower by about half a percent. Though, some of the indices were trading in green too, as China announced the cut in reserve ratio, the amount of cash banks must set aside as reserves to boost economic growth, and as speculation heightened Greece may exit from the single European currency.

Back home, it turned out to be an extremely volatile session for the frontline indices, which showed sharp swings in the dying hours of trade only to eventually quadruple the sorrow of closing in the negative terrain. The session characterized of high amount of choppiness as the indices tried hard to claw beyond the psychological 5,000 and 16,400 levels but it seemed like the bears had the last say as they stalled the resurgence of the benchmarks and took profits off the table. Sentiments in domestic markets were dampened amid the lingering turbulence in the Europe-zone as the local gauges were largely influenced by the moves in European equity markets. Local bourses pared all losses in mid noon trades in tandem with European peers as sentiments were buoyed by a rally in heavyweight energy stocks on reports that Qatar's sovereign wealth fund is set to buy a stake in Royal Dutch Shell, whilst hopes for a Greek political deal helped calm investors' nerves. However, the optimism proved short-lived as nervy investors took the opportunity to book profits and drag the benchmarks lower by three fourth of a percent. The benchmark gauges at one point in time appeared set to breach the psychological 4,900 (Nifty) and 16,200 (Sensex) levels as investors were ruthlessly squaring off positions across the board on getting the unexpectedly shocking March industrial production data. Sentiments remain somber as India's industrial production unexpectedly contracted 3.5% in March for the first time in five months, indicating marked slowdown in Asia’s third largest economy. In addition, market’s mood also got undermined on the back of disappointing cues from money market where anemic rupee returned to its depreciating ways against the US dollar despite the Reserve Bank’s efforts to check outflow of forex. The defensive Healthcare counter plummeted close to two percent being the top laggards in the BSE sectoral space while investors also were seen booking profits in Power and FMCG pockets, which sank around one and half a percent each. Meanwhile, Airline companies like Kingfisher, SpiceJet and Jet Airways were pressured after DGCA warned them against hiking fares beyond their band, saying the cost of operation has not undergone any major change over the past two months. However, rate sensitive Automobile and Banking sectors managed to keep their head above the water, settling with slight gains and doing their bit to cap market losses. Finally, the BSE Sensex lost 127.07 points or 0.77% to settle at 16,292.98, while the S&P CNX Nifty declined by 36.80 points or 0.74% to close at 4,928.90.