Markets to make a soft-to-cautious start on weak global cues

The Indian markets losing their pace in the final hours, posted loss of over a quarter percent in the last session, as investors remained worried about North Korea's nuclear intentions. Today, the start is likely to remain cautious on weak global cues and traders will also be concerned about IMF trimming India’s annual growth forecast by 0.4 percentage points to 7.2 percent for 2017, citing the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent demonetization move. Also, there will be negative reaction on not only the IT sector but the whole market after the country’s largest software services exporter, Tata Consultancy Services (TCS) missed estimates on both the profit and revenue front with negative growth in the BFSI and retail segments. The company’s net profit for the Q4 fell 2.5% sequentially to Rs 6,608 crore, while revenues declined 0.3% to Rs 29,642 crore. It’s for the second consecutive quarter that it has underperformed Infosys. Traders may however get some support with good monsoon expectation, as the Indian Meteorological Department (IMD) has said that the country would receive 'normal' monsoon this year, with a fair distribution of rainfall across major parts of country. Banking stocks will be under pressure, as the Reserve Bank of India (RBI) has released a series of guidelines with a view to tighten norms concerning recognition of and provisioning for bad assets at banks.

The US markets despite coming off the day’s low ended in red in the last session. The negative sentiment was generated in reaction to quarterly results from Goldman Sachs, as the financial giant reported weaker than expected first quarter earnings. The Asian markets made mostly a lower start tailing the decline in the US markets. Uncertainty coupled with weaker-than expected results have pushed some investors away from riskier assets. The Japanese market too was marginally in red despite weakness in yen.

Back home, Indian equity markets showed a volte-face on Tuesday as what started on a promising note ended as a dismal show. The optimism in local markets petered out completely by the end of trade and the indices even drifted in to the negative territory despite getting off to a gap-up opening. Marketmen were optimistic for most part of the morning session as World Bank in its report said that Indian economy will claw back to 7.2 percent growth this financial year and rise further to 7.5 percent in 2018-19. It also said that timely and smooth implementation of the GST could prove to a significant benefit to economic activity. However, sentiments got spooked in early afternoon trades following the sell-off in European markets as British Prime Minister May called a snap election for June 8, 2017. The shock announcement comes nearly one month after the UK triggered Article 50 to leave the European Union. Besides, profit booking in Realty and Metal counters exerted downside pressure on the frontline indices and dragged them even below to the psychological 9,150 (Nifty) and 29,400 (Sensex) levels. Sentiments weakened further after Indian Meteorological Department (IMD) released its prediction for this year's monsoon and said that monsoon rainfall may be 96% of the normal with an error margin of 5% on either side. IMD also said that there is more than 50% chance of El-Nino developing from August. Monsoon predictions are considered to be vital for Indian economy as agriculture still largely is dependent on the weather phenomenon. Finally, the BSE Sensex decreased 94.56 points or 0.32% to 29319.10, while the CNX Nifty was down by 34.15 points or 0.37% to 9,105.15.