Markets likely to make a soft start, may recover in latter trade

The Indian markets extended their losing streak in the new week and the benchmark indices despite a positive start and firm initial trading succumbed to the concern of rising inflation numbers. Some weak earnings announcements too added to the decline. Today, the start is likely to be cautious, though some recovery can be expected in the latter part of the trade as traders may go for some bottom fishing at lower levels. The movement of the rupee will be closely eyed as the Indian currency dipped to its record low in last session, weighed down by global economic concerns, rising domestic prices and fading expectations of interest rate cuts. Meanwhile, the government and the central bank are pondering over a plan to move bulk dollar purchases by oil marketing companies out of the currency market to make the weakening rupee less volatile.

Power stocks may continue buzzing as the government has informed that the projected power demand of 1,354.87 billion units by 2017 will be met as 85,000 MW capacity addition is planned during the 12th five-year plan. The 18th Electric Power Survey (EPS) report estimated the energy requirement in the terminal year of 12th Plan period (2012-17) at 1,354.874 billion units.

As the result season is nearing to its end there will be lots of important result announcements to keep the markets buzzing. Aditya Birla Nuvo, Cummins India, Deccan Chronicle, Essel Propack, Gammon India, India Infoline, MMTC, Pantaloon Retail, Patel Engeineering, Reliance Media, Shree Cement, Sterling Biotech, Unitech and Videocon Inds are among the many to announce their numbers today.

The US markets extended their somber mood in the new week and despite some recovery attempt in the latter half of the trade closed sharply lower. Worries over the political and economic stability of the eurozone and the safety of the US banking sector remained on the minds on the traders. Most of the Asian markets have made a weak start, though Hang Seng is showing some resistance but the Japanese Nikkei has given up on US and European concern. The Chinese market too was down by over half a percent as Pacific Investment Management Co. said that China’s economy may grow at the weakest pace in 13 years in 2012.

Back home, stock markets in India recovered notable ground from the day’s lowest point in dying moments of trade as the frontline equity indices, which once traded with over a percent cut in late trades, settled with less than half a percent cut. The volatile session was also marred by some technical glitches as traders complained about problems placing orders on the NSE's futures and options platforms. Though the issue was resolved and problems involving the confirmation of orders had been addressed, it led to aberrations in the mid noon trades. By the end, the frontline gauges not only held on to important psychological levels of 4,900 (Nifty) and 16,200 (Sensex) but also managed to outperform the European counterparts which got thrashed by around two percentage points. Markets had got off to a reasonable opening after registering the three and half a percent laceration in the week gone by. But the bargain hunting that was evident for most part of the morning session faded away immediately after commerce ministry released India’s widely tracked WPI inflation numbers which accelerated to 7.23% for the month of April, worse than consensus estimates of 6.7%. Investors resorted to largely across the board risk aversion in late morning trades as they were expecting that a moderation in inflation reading would give some leeway to the RBI to further employ liquidity easing measures at a time when the industrial activity is in doldrums. However, with the rise in WPI index, the Indian Reserve Bank remains in a tight spot as it finds itself trapped between curbing inflation and trying to shore up economic growth. The interest rate sensitive Baking and Real Estate counters on the BSE suffered the maximum brunt of selling pressure after the disappointing inflation print came to the fore and plummeted over a percent each. However, defensive -Healthcare and IT sectors too went home with gains of around half a percent and helped the benchmarks in capping the losses. Moreover, amid a series of disappointing fourth quarter earnings announcement, index heavyweight L&T’s earnings lifted sentiments to a certain extent as it surged close to two percent in the session. Finally, the BSE Sensex lost 77.14 points or 0.47% to settle at 16,215.84, while the S&P CNX Nifty declined by 21.10 points or 0.43% to close at 4,907.80.