Markets likely to see some recovery on the last trading day of the week

The Indian benchmarks suffered cut of around a percent and half in last session, though the industrial production data came in better than expected but the market mood remained somber since beginning after IT bellwether Infosys came with a lower than expected numbers and gave 5% growth guidance for the year, much lower than its earlier projection. However, the number one IT company, Tata Consultancy Services (TCS), came out with better results, but after the markets closed, posting a 37% rise in net profit in the first quarter to Rs 3,317.7 crore. Today, the start is likely to be flat-to-positive and the optimistic cues from the regional peers are likely to help the markets make some recovery. The TCS numbers too will make some impact and will provide some positive momentum to the markets. The telecom companies are likely to be buzzing as the Empowered Group of Ministers (EGoM) on telecom headed by P Chidambaram agreed to a proposal to allow telecommunication companies to mortgage spectrum to raise funds from banks to buy airwaves, though the EGoM will meet again early next week to decide on crucial decisions like fixing base price. Traders will also be eyeing the movement of rupee which has declined to its two week lows in last session.

The US markets extended their bearish run on Thursday and all the major indices lost modestly after witnessing a volatile day of trade. The hopes of monetary stimulus from major central banks got dampened as Bank of Japan escaped announcing any monetary easing, and weighed heavily on the sentiments. The Asian markets have though made a positive start and the Chinese market was leading the pack on report that country’s economy grew 7.6 percent in the second quarter from a year earlier. However, the Bank of Korea reduced its 2012 economic-growth forecast for the second time this year.

Back home, distressed markets clobbered out of shape in Thursday’s trade with benchmarks ending the session with a cut of over 1.30%, weighed down majorly by technology stocks after disappointing performance reported by IT bellwether Infosys. The combination of domestic as well as global factors led to the brutal butchery across the board and local bourses snapped the session below their crucial 5,250 (Nifty) and 17,300 (Sensex) levels. The IT major also remained the top loser, losing nearly 9% due to lower than expected numbers in the first quarter of FY13 and weaker than expected guidance for financial year 2012-13. Thereafter, bloodbath continued till day’s end as upset investors ignored the decent May index of industrial production (IIP) data and are now eagerly waiting for inflation data scheduled for July 16, which will decide the RBI’s move in its quarterly monetary policy review on July 31. May IIP improved to 2.4% at 170.2 for the month of May 2012 versus a negligible growth figure of 0.1% in April, which later was revised to show a contraction of 0.9%. The cumulative growth for the period April-May 2012-13 stands at 0.8% over the corresponding period of the previous year. However, growth in major sectors like capital goods and mining came in negative. Manufacturing, electricity, basic goods and consumer goods growth was lower as compared to previous month. Meanwhile, the sentiments also got bashed by infra stocks, which declined after Union Minister for Road Transport & Highways CP Joshi said the performance of road sector in Q1 June 2012 was disappointing. While, telecom stocks also got bludgeoned and declined for the second straight day ahead of a meeting of the empowered group of ministers on spectrum pricing which is scheduled, under its new head -- P Chidambaram. The banking stocks withered under pressure after May industrial output data dimmed hopes that Reserve Bank of India (RBI) would slash key policy rates in its upcoming monetary policy review on July 31. Bucking the trend, upstream oil companies gained tracing the higher Brent crude prices. Finally, the BSE Sensex shaved off 256.59 points or 1.47% to settle at 17,232.55, while the S&P CNX Nifty plunged by 71.05 points or 1.34% to close at 5,235.25.