Markets likely to get a good start tailing the global peers

The Indian markets went through a disappointing day of trade on Thursday with benchmark indices losing over a percent each. Though, the rise in inflation numbers bolstered hopes of rate cuts by the RBI, but continuous decline in core inflation numbers made the investors cautious that apex bank may wait for a while before taking any decision in its upcoming policy review. Today, the start is likely to be in green and indices will recover in initial trades after their steep fall in last session. Traders will be eyeing the advance tax numbers for the first quarter to gauge the health of India Inc, while the manufacturing  sector is likely to report weak numbers, good number is expected from oil companies and the private banking companies. Meanwhile, the commodities stocks are likely to gain some strength in tandem with their global counterparts, while export oriented stocks may remain in subdued mood after India’s exports contracted by 4.16% year-on-year to $25.68 billion in May, for a second time this year. Imports too dropped, by a sharper pace of 7.36% y-o-y, to $41.9 billion, signalling a weaker domestic economy. Oil companies too may remain buzzing as there is expectation of another rate cut in petrol prices today. Owing to falling international crude prices, state-owned oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) will meet today to decide on the quantum of reduction in petrol prices.

The US markets bounced back on Thursday on inflating hopes that additional stimulus is on the way from the Federal Reserve following a disappointing initial jobless claims number and as consumer prices fell 0.3 percent in May, the biggest drop in more than three years. Also, there was reports that central banks are preparing for coordinated action to provide liquidity if needed after the Greek election this weekend. The Asian markets have made a positive start and barring Kospi all other indices are trading with good gains on hopes of a collective effort by central bankers.

Back home, stock markets in India witnessed a disappointing session of trade on Thursday as the benchmark equity indices suffered a nasty blow of over a percent after selling pressure aggravated in the second half of trade. The psychological 5,100 (Nifty) and 16,900 (Sensex) levels proved as stern resistances as the key gauges tumbled lower from those levels and the southbound journey only halted with the close of trade. Domestic markets got off to a quiet start as sentiments across global space remained uninspiring. Markets across the Asian region traded on a pessimistic note as investors were influenced by overnight fall in US markets pressured by disappointing US economic reports like May retail sales data, which once again declined and wholesale price numbers which too fell the most in three years. Moreover, lingering uncertainties over Europe's financial turmoil too kept investors away from riskier asset classes as Greek banks saw elevated levels of withdrawals ahead of the country's crucial general elections this weekend and weak domestic economic news. On the domestic front, a government data showed India’s headline inflation rose largely on the expected lines in May to 7.55% as compared to 7.23% for the previous month. However, core inflation number came in at 4.9%, slightly below the 5 percent threshold which is likely to compel Reserve Bank of India to resort to monetary easing. But market participants went on to overlook the only silver lining that emerged from May inflation data amid growing concerns that the central bank may not go about cutting rates as aggressively as previously expected. Some degree of political uncertainty too had its toll on sentiments after seeing the latest developments in the political circle on presidential election. Meanwhile, cues from the money market too remained somber as the beleaguered rupee has resumed its streak of deprecation and is gradually inching towards 56 levels against the US dollar and undermined sentiments. Besides, stocks from the fertilizer counter, which traded on a sanguine note since morning trades on the buzz that government may raise urea price by 10 percent with an aim to cut up to Rs 2,000 crore on the total subsidy outgo on urea, too came off the day’s highs and even plunged in to the negative terrain after reports that government deferred the Fertilizer Ministry's proposal. Finally, the BSE Sensex shaved off 202.63 points or 1.20% to settle at 16,677.88, while the S&P CNX Nifty plunged by 66.70 points or 1.30% to close at 5,054.75.