Indian markets likely to make a weak start of the day

The Indian markets closed marginally lower in last session, the three days gaining streak took a pause ahead of the ECBs policy decision. The session remained range bound and the rate sensitive’s dragged the markets lower. Today, the start of the markets is likely to be weak and the Nifty might trade below 5200 level in the early trade. The pressure of European disappointment is going to get double with the India Meteorological Department (IMD) saying that Monsoon rains will not be enough to save the country from its first drought in three years. Infra stocks are likely to remain buzzing after government decided to allow public sector companies and public-private partnership projects to use government-owned land, which has been banned since last year. Government said that the ban was hurting the pace of development of infrastructure projects, leading to long delays in awarding concessions for them.

There will be lots of scrip specific actions and some important result announcements to keep the markets buzzing. Abbott India, BGR Energy, ICRA, Jet Air India, Marico, Moser Baer, Peninsula Land, SKS Micro, SUN TVNetwork, United Bank etc. are among the many to announce their numbers today.

The US markets sold off on Thursday, following the disappointment delivered by the European Central Bank (ECB). There were strong hopes that ECB will go for some stimulus measure, but it kept the rates unchanged, refraining from any immediate action to contain the euro zone debt crisis. Though, on economy front the news were good as jobless claims fell and the retailers came up with good numbers for the month of July. The Asian markets have made a soft start after ECB failed to deliver immediate action, also there were concern that Chinese monetary authorities too will go slow to ease policy.

Back home, Indian equity indices went on to consolidate and ended the range-bound session with moderate cuts. Though, the frontline indices failed to extend their gaining momentum and snapped the four sessions gaining streak, however the recovery in the second half minimized the extent of damage for the bourses. The psychological 5,200 (Nifty) and 17,200 (Sensex) levels proved as strong supports as the benchmarks rebounded after hitting intraday lows. Investors remained on the sidelines as investors nervously awaited the latest policy outcome from the European Central Bank (ECB). The sentiments got bashed by rate sensitive banking stocks. Scrips like SBI, HDFC Bank, PNB and Yes Bank all edged lower in the trade as the Reserve Bank of India (RBI) kept repo rate unchanged at its first quarter review of the Monetary Policy 2012-13 early this week. Moreover, sentiments were also dampened after airline stocks like Kingfisher and Spice Jet fell after the state-owned oil companies, on August 1, 2012, raised jet fuel or ATF rates by a steep 4.5% on firming international crude oil prices. The hike comes on back of a 1.7% hike in rates effective from July 16, 2012. Though, the downside remained capped on news that the trade deficit narrowed to $40.05 billion from $46.23 billion in the corresponding period last year. The trade deficit for June too fell to $10.31 billion from $14.4 billion in June 2011. Exports fell 5.5% to $25 billion in June, compared with $26.5 billion in the corresponding month last year, while imports declined by 13.5% to $35.4 billion, compared with $40.9 billion in June 2011. The sentiments also got some support from news that Prime Minister Manmohan Singh has approved relaxations in the transfer policy for the government land for infrastructure projects. Much to the surprise, improving from a five percent below average in the previous week, India's monsoon rains were only four percent below average in the week to August 1, as rainfall revived in soybean and rice growing areas of India. On the sectoral front, oil and gas sector remained the top loser led by RIL, which lost about a percentage point. Moreover, PSU oil marketing companies like BPCL, HPCL and IOC fell for the second day in a row on concerns of high under-recovery on domestic sale of diesel, kerosene and LPG at government controlled prices. Finally, the BSE Sensex lost 33.02 points or 0.19% to settle at 17,224.36, while the S&P CNX Nifty declined by 12.75 points or 0.24% to close at 5,227.75.