Markets to get a flat-to-soft start tailing regional peers

The Indian markets extended their upmove with the start of a new week and added another over a quarter percent to their tally in last session, with Sensex crossing 20100 and Nifty nearing 6100 mark. Today, the start is likely to be soft-to-flat as the regional peers are not in good shape and traders will remain cautious before going long. The gold related stocks are likely to come under pressure as the government has hiked import duty on gold and platinum by 50%, which is aimed at curbing gold imports and is bound to push up prices of gold and platinum jewellery further. India imported 600 tonnes of gold in the first three quarters of this fiscal. The banking stocks too are likely to see some pressure as the global ratings agency Moody's in its Asia-Pacific Banking Outlook has said that it has a "negative" outlook on the country’s banking system due to concerns over asset quality and the high interest rates.  It further stated that in India, impaired loans are yet to peak among public sector banks. The coal stocks too will see some action, especially the Coal India as the government has said that it will soon appoint a coal regulator to monitor the fuel pricing, sampling and other practices in the sector.

Also, there will be lots of important result announcements to keep the markets buzzing. Aptech, Bank of Maharashtra, Hindustan Unilever, Indiabulls Finance, Indiabulls Securities,Kotak Mah Bank are among the many to announce their numbers today.

The US markets remained shut on Monday for Martin Luther King Jr. Day and were unable to give any cue to the other global markets. The Asian markets have made mostly a soft start with some of the indices trading lower by over half a percent. The Japanese market too was under pressure after yen strengthened slightly from its two and half year low ahead of the outcome of a Bank of Japan’s meeting later today.

Back home, benchmark equity indices, protracting previous two sessions’ euphoria, fervently went on gaining ground, to conclude with modest gains of over a quarter a percent. The frontline gauges gained for the fifth out of six trading sessions mainly led by shares in state-run oil firms, which surged for a third day on Monday, with BPCL and HPCL extending their gains after the government’s decision to allow higher diesel prices. The rally was also led by buying in index-heavyweight Reliance Industries (RIL) which hit fresh 52-week high after better-than-expected results in the fiscal third quarter. The company reported a 23.92% rise in its net profit at Rs 5502.00 crore for the quarter under review as compared to Rs 4440.00 crore for the same quarter in the previous year. However, global cues remained mixed as European shares inched towards two-year highs, while, Asian markets ended mostly lower. Back home, retaining India’s credit rating at the existing level, global agency Moody’s cautioned that a high fiscal deficit could pull down the growth in the coming years. Moody’s said that ‘large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constrain the sovereign credit profile’. However, on the positive side, the global rating agency reaffirmed sovereign credit rating of India at Baa3, which indicates investment grade, with a stable outlook. Some strength also came in from the FMCG pack as stocks like Nestle India, ITC, Colgate-Palmolive (India), Britannia Industries, Marico and Godrej Consumer edged higher after the government said sowing of Rabi or winter crops, so far this year has exceeded the area sown by this time last year. Rally in power stocks too aided the sentiments as stocks like Adani Power and JSW Energy surged on hopes that the government may approve setting up a coal regulator in its nine-member ministerial panel meeting headed by Finance Minister P Chidambaram. However, the gains remain capped as selling witnessed in auto counters and stocks like Tata Motors, Mahindra & Mahindra and Ashok Leyland declined on concerns that higher diesel prices will hit sales adversely. Finally, the BSE Sensex gained 62.78 points or 0.31% to settle at 20,101.82, while the S&P CNX Nifty rose by 17.90 points or 0.30% to end at 6,082.30.