Markets to get a cautious start on mixed global cues

The Indian market extended their jubilation and the Sensex was able to touch the 20k psychological mark intraday after two years, on hopes of rate cut by RBI in its next policy review. Today, the start is likely to be cautious as the global cues are mixed. While, there will some sectoral actions, global cautiousness is likely to weigh on the sentiments. The World Bank  has cut its global growth forecast for this year, as austerity measures, high unemployment and low business confidence was dampening economies in developed nations. There will be buzz in the banking sector as International Monetary Fund has said that India’s financial system has been made vulnerable by a deterioration in bank assets and a lack of capital as the economy slowed. On the other hand there is a positive news that the finance ministry has finalised norms for new bank licenses and has sent its comments to the Reserve Bank of India. There is likely to be some somberness in the retail stocks as Fitch Group has maintained a negative outlook on the Indian retail sector for 2013, saying that slowdown has started hurting retail sector due to waning consumption owing to rising inflation and other macroeconomic factors. There will be lots of important result announcements like Bajaj Auto, TTK Prestige and Yes Bank to keep the market ticking.

The US markets made another mixed closing on Tuesday, traders despite some cautiousness were encouraged by the better than expected retail sales numbers, overlooking Washington’s strained budget negotiations in the month. The Asian markets have made a mixed start and some of the indices including Japanese Nikkei was in red as the yen gained, dimming the outlook for export earnings. However, Japan’s machinery orders rose more than expected in November.

Back home, buoyed by strong corporate earnings and expectations of a rate cut by the Reserve Bank of India (RBI), domestic benchmarks building on last session’s gains concluded the Tuesday’s trade with a gain of over half a percent. Though, markets in the noon deals appeared to be exhausted with their run up rally, the lost momentum was soon restored as both the frontline indices were back on track thanks to spurt in banking counter on account of better than expected third quarter results of two private sector lenders viz. Axis Bank and South Indian Bank, which led Sensex topping the 20,000-mark for the first time since January 7, 2011.  Axis Bank reported 22.22% rise in its net profit at Rs 1347.22 crore for the quarter as compared to Rs 1102.27 crore for the same quarter in the previous year while, South Indian Bank reported 25.44% rise in its net profit at Rs 128.25 crore for the quarter as compared to Rs 102.24 crore for the same quarter in the previous year. Sensex lost its crucial 20,000 mark as profit booking was witnessed at the end of trade but, both the gauges ended the session at their 24-month high supported by interest rate sensitive realty stocks which rose for the second straight day as December’s softer headline inflation print along with recent data showing contraction in industrial production in November 2012 and decline in exports in December 2012 would bolster expectations that the RBI will shift its attention to supporting economic growth by lowering interest rates at its monetary policy review on January 29, 2013. However, global cues remained sluggish as European counters traded cautiously in the early. However, mainland Chinese stocks extended their rally on more buying amid hopes for greater foreign participation in the domestic markets. Back home, market continued to trade jubilantly as sentiments got support from Telecom stocks as scrips like Bharti Airtel, Idea Cellular, etc saw a sudden surge in the late trade on talks of imposition of voice tariff as early as next week. Cement stocks too boosted the sentiment with Ambuja Cement, ACC and UltraTech Cement all registering gains of over 1% on decision to fight back cartelization case. Shares of cement companies rallied on news of them drawing up plans to question the legality of the cartelization case when it comes up for hearing before the Competition Appellate Tribunal (COMPAT) on January 29. However, gains remain capped up to certain level after stocks from Sugar space, namely, Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini and EID Parry, ended mixed even after the government liberalizing the procedure for exports of pharmaceutical grade and specialty sugar. Finally, the BSE Sensex gained 80.41 points or 0.40% to settle at 19,986.82, while the S&P CNX Nifty rose by 32.55 points or 0.54% to end at 6,056.60.