Markets likely to get another cautious start

The Indian markets suffered cut of about half a percent in last session mainly due to weakness in local currency and soft global cues. Today, the start is likely to remain cautious and the traders will concentrate on the earnings season and IIP numbers for the next trigger. However, traders will get some support with the statement of Finance minister P Chidambaram that the difficult phase for the economy is over and that the focus should now shift to higher growth. The PSU oil marketing companies are likely to remain buzzing as the Prime Minister Manmohan Singh has reiterated his position of “phased rationalisation of energy prices to bring them in line with global prices”.  The non-banking finance companies (NBFCs)  engaged in infra financing too are likely to remain in action as the Reserve Bank of India relaxing the ECB norms, has said that NBFCs operating as infrastructure finance companies (IFCs) can now avail themselves of overseas borrowings up to 75 per cent of their owned funds without its approval.

The US markets got a soft start of the new week though they managed to recover their early losses in the final hours but traders were seen cashing on some gains after moving sharply higher last week. Most of the Asian markets have started in red, Japanese market was down as yen has strengthened for the second straight day putting pressure on the exporters. However, the Chinese market has made a positive start.

Backhome, after showcasing an awe-inspiring performance in last few sessions, Indian frontline equity indices slipped into red on Monday and registered their first negative close in 2013, as investors lacked conviction to take larger bets after witnessing a rally of over one and a half percent in last four sessions. The psychological 6,050 (Nifty) and 19,800 (Sensex) levels once again proved as major resistance for the frontline indices as they failed to sail beyond those levels. Markets started the day in the flat territory tracking positive cues from US markets. However, the domestic bourses failed to hold their neck in the green for longer period and slipped into the red in late morning session. The bulls never looked convinced to make a comeback during the entire session as traders played safer to take any bets in blue-chip stocks ahead of important events like IIP numbers and result announcements starting with IT bellwether Infosys later in the week. Supportive cues from US markets provided the much needed support to local markets in first half. Investors’ morale got buttressed on the back of reports that nonfarm payrolls rose by 155,000 in December and the jobless rate stood at 7.8%, suggesting the budget battle in Washington over the fiscal cliff didn’t do much damage to the economy. The pace of hiring in December almost perfectly matched the level of job growth over the past two years. However, disappointing cues from European market took their toll on domestic sentiments in second half. Some anxiety also came in from currency markets after Indian rupee slid by 13 paise to 55.03 against the dollar in late morning trade due to bouts of demand for the US currency from banks and oil importers amid firm cues overseas. The sentiments also soured after plan panel study highlighted that achieving 8.2% growth over the next five years (2012-17) will not be easy and a fresh approach to economic issues is needed to push growth. However, bucking the trend PSU oil marketing companies viz. BPCL, HPCL and IOC extended their previous session’s rally triggered by reports that the government has formally started the consultation process for raising diesel and cooking gas prices. Shares of telecom companies like Reliance Communications (RCOM) and Tata Teleservices too gained after telecom minister Kapil Sibal reported that cabinet will soon decide the reserve price for the CDMA spectrum band. Finally, the BSE Sensex lost 92.66 points or 0.47% to settle at 19,691.42, while the S&P CNX Nifty declined by 27.75 points or 0.46% to end at 5,988.40.