Markets likely to get a flat start; inflation data eyed

The Indian markets lost their way in the final hours of trade in last session and closed with marginal losses, snapping a week with a cut of over one and half a percent. Today the start is likely to be flat-to-cautious and traders will be eyeing June inflation data, scheduled to be announced today. It’s expected that the soaring food costs might have taken the inflation numbers to a new high, The IIP numbers have improved modestly and if the inflation numbers remain on elevated levels the Reserve Bank of India (RBI) will remain hawkish on monetary policy and may not go for a rate cut in its upcoming policy review. There will be some buzz in the sugar stocks, as the Food Ministry has proposed imposing 10 per cent import duty on sugar as the country has surplus domestic production. Meanwhile, US President Barak Obama has called for a new wave of economic reforms to reverse a worsening investment climate in India citing concerns over the deteriorating investment climate in that country. Traders will also be eyeing some major corporate earnings announcements for the day.

The US markets surged on Friday, though the economy news were mixed but traders sentiment got boosted with the Chinese growth figures, which despite being at three years low remained in-line with the general expectations. The Asian markets have made a mixed start, though mostly are in green but few others are trading with cut of about a quarter percent. The Chinese market was the biggest looser despite Premier Wen Jiabao saying that the government will increase measures to support growth in the world’s second-largest economy. However, he warned that economic growth isn’t yet in place and that 'difficulties' may persist for a while.

Back home, sell-off in last leg of trade dragged domestic benchmarks lower, though the markets traded in positive terrain for most part of the session. The bourses traded mostly above their crucial 5,250 (Nifty) and 17,300 (Sensex) on Friday’s trade supported by telecom stocks, which rose after the Empowered Group of Ministers (EGoM) on telecom allowed mobile phone companies to mortgage airwaves, a move that will help telcos to use spectrum as collateral and raise funds from banks for the upcoming auctions. However, investors largely remained on the sideline waiting for inflation data (which will decide the RBI’s move in its quarterly monetary policy review on July 31) that is scheduled for July 16. The sentiments were also supported by better than expected TCS and HDFC bank’s Q1 FY13 numbers. HDFC Bank registered a jump of 30.64% in its net profit at Rs 1,417.39 crore for the first quarter ended June 30, 2012 while, total income of the bank increased by 34.36% at Rs 9,536.91 crore for Q1FY13 as compared Rs 7,098.00 crore for the corresponding quarter previous year. In addition, its gross non-performing assets (NPAs) too improved 0.97% in the April-June quarter as against 1.04% in the same quarter previous year. But the turnaround witnessed in last leg of the day’s trade was mainly due to fall in metal space. Scrips like Hindalco, Jindal Steel, Sterlite Industries and Sesa Goa edged lower as China’s economy cooled to its weakest rate of growth in more than three years in Q2 June 2012. Moreover, the sentiments also got hammered after Realty stocks, which traded with traction in the first half, reversed their initial gains in the final hour as investors booked their profit. Indian Rupee advanced against US dollar, in line with a jump in global risk assets after China's second quarter GDP landed in line with forecasts. On the macro front, India’s export, shrank 5.45 percent in June 2012 to $25.07 billion from $26.51 billion in the same month last year while, imports into the country for the month under review stood at $35.37 billion after declining by 13.46 percent, leaving a trade deficit of $10.3 billion. Finally, the BSE Sensex lost 18.85 points or 0.11% to settle at 17,213.70, while the S&P CNX Nifty declined by 8.00 points or 0.15% to close at 5,227.25.