Markets likely to get a flat start, may recover in second half of trade

The Indian markets continued sulking and lost their way in the second half of last session, rate sensitive’s were disappointed by RBI’s governor comment that the inflation still remains above tolerable levels, dampening the rate cut hopes. The earnings announced too, were not encouraging and the domestic markets ended flat despite good cues from the Asian markets. Today, the start is likely to be flat though the optimism spread from US might give some respite to the local markets later in the day, also the worries of deficient monsoon is likely to lessen, as the advance estimates of foodgrain production was pegged at an all-time high of 257.44 million tonnes (MT) for the 2011-12 crop year, higher by 5 MT than the April projections. However, the mood is likely to remain cautious and much upside cannot be expected as during the second quarter, Indian consumer confidence declined four points to 119 as compared to 123 in the first quarter of the current calendar year. The markets is likely to be buzzing on the report that on acceptance of recommendations of an advisory committee appointed by Sebi, mutual fund investors will have to shell out more for their investments. There will be lots of important result announcements too.Bajaj Auto, Bajaj Holdings, CRISIL, Kirloskar Brothers are among the many to announce their numbers today.

The US markets made some recovery on Tuesday after declining for last couple of days, as Federal Reserve Chairman Ben Bernanke kept the hopes alive for more stimulus and major companies like Coca Cola and Goldman Sachs came up with better than expected numbers. The Asian markets are trading mixed after a good start, as Federal Reserve Chairman Ben S. Bernanke said US policy makers are prepared to act to boost economic growth.

Back home, domestic benchmarks, after a gap-up opening and trading in the green for most part of the day, snapped the session on a flat note on Tuesday. After touching their intraday high in the initial session barometer gauges started falling due to selling pressure after Duvvuri Subbarao commented that, India’s wholesale and consumer price inflation levels are way above the Reserve Bank of India’s comfort levels, diminishing hopes of a rate cut at the July 31 policy review. The marketmen also offloaded their positions as International Monetary Fund (IMF) pegged India’s economic growth projection lower by 0.7% at 6.1% for 2012, while global growth forecast for the same year too has been reduced to 3.5% from 3.6%. The global lender has shaved 2013 growth projection of India to 6.5%, while global growth projection was lowered to 3.9% from 4.1%. The sentiments were also dampened, after Axis Bank posted its Q1 numbers and tumbled over 2% as its ratio of gross non-performing assets rose to 1.06% of gross advances on June 30, 2012, higher than 0.94% on March 31, 2012. Though, the bank’s net profit rose 22.41% to Rs 1153.52 crore while, its total income has increased by 29.24% at Rs 7818.37 crore for quarter under review. Moreover, index heavyweight Reliance Industries turned negative, after trading in green for most part of the session, on report that RIL and its partner BP told Government of India to approve FY13 capex to avoid shutdown and warned that gas output at KG-D6 may stop by 2015. The sell off intensified in the last leg of trade after outlook on inflation got worsened with monsoon being below average, it is expected that food prices may rise during the festival season and may stay at elevated levels for a while if monsoon fails to pick up. Moreover, the investors remained sideways waiting for Centre to introduce few pending reform initiatives in order to bolster sagging growth. Moreover, Tata group stocks slipped for the second consecutive session. The country’s largest software services exporter TCS tanked about 2% and top commercial vehicle maker Tata Motors was down 1.5%, while Tata Steel and Tata Power went down 0.7% each. Finally, the BSE Sensex gained 1.99 points or 0.01% to settle at 17,105.30, while the S&P CNX Nifty declined by 4.40 points or 0.08% to close at 5,192.85.