Markets to get mild recovery with a positive start

The Indian equity markets witnessed a choppy trade in the last session and due to sharp selling in mid cap and infra stocks benchmarks reversed more than what they have gathered in the previous session. Today, the start is likely to be cautious but positive. Urban Development Minister Kamal Nath emphasized that India has seen a large number of reforms in recent years and the country expects to see about $1 trillion investments in infrastructure in the next five years to boost economic growth. There will be some jubilation in the telecom stocks as the Bombay High Court based on a petition filed by Idea Cellular, challenging the DoT order to pay the one-time fee has issued a stay order on the Government’s decision to collect a one-time fee for excess spectrum. There will be some recovery in  infra stocks too, that plunged in last session based on some scrip specific rumors. There will be buzz in the debt market too as in a bid to attract foreign exchange, the Reserve Bank of India has notified enhancement in the debt investment limit for foreign institutional investors (FIIs) and long-term investors from $65 billion to $75 billion.

There are lots of important result announcements too, to keep the markets buzzing. Aban Offshore, ICRA, Kirloskar Bros Inv, Maruti Suzuki, Oriental Bank, Reliance Power, Tata Coffee, Tata Metaliks, Texmo Pipes are among the many to come with their quarterly numbers today.

The US markets extended their winning streak supported by better jobs data, however the prevailing weakness in the Apple stocks weighed on the tech heavy Nasdaq. Meanwhile, the weekly jobless claims fell 5,000 to a seasonally adjusted 330,000, dropping to its lowest level in nearly five years. Majority of the Asian markets have made a positive start tailing US cues and weakness in yen that had led the Japanese market higher by over two percent. Consumer prices in Japan declined for the sixth time in seven months, adding to the case for more monetary stimulus.

Back home, stock markets in India staged an unenthusiastic performance on Thursday with both the frontline indices snapping the session below their crucial 6,050 (Nifty) and 20,000 (Sensex) levels. The domestic gauges, after making a good start supported by encouraging cues from US markets, shed over half a percent as selling pressure in the infra stocks and butchery in midcap indices dampened investors confidence. Sentiments also got undermined after banking counters throbbed by over half a percent ahead of the Reserve Bank of India’s (RBI) quarterly monetary policy review scheduled for January 29. Traders remained cautious despite Finance Minister P Chidambaram sought to bury differences with the RBI, saying the central bank had the final call on monetary policy. Till now, the finance ministry has been suggesting to shift to a monetary easing stance given the severe moderation in industrial growth and a decline in exports. Traders are now expecting a modest 25 basis points (bps) rate cut against the previous expectation of generous 50 bps. Selling got intensified in late trade due to a sharp sell-off in high beta realty counter led by massive selling in HDIL and IVRCL stocks. HDIL tumbled by over 23 percent after the company’s promoter sold around 50 lakh shares in the secondary market. Some rumors of bankruptcy and defaults were also there which was totally denied by the company’s vice-president during the trade. The Metal and Banking pockets too suffered severe pounding and plunged around two percent. Global cues too remained sluggish as the IMF chief Christine Lagarde warned of threats ahead and said that the world’s major economies including Europe, the US and Japan need to get their house in order. Back home, some pressure also came in from Aviation sector as stocks like Kingfisher, Spicejet and Jet Airways edged lower after the Supreme Court ruled that air travellers should not pay transaction fee and that the aviation regulator should review the wide variation in air fares by airlines. However, the losses remain capped up to certain level as buying in software stocks provided some strength to the bourses on weak rupee. Finally, the BSE Sensex lost 102.83 points or 0.51% to settle at 19,923.78, while the S&P CNX Nifty declined by 34.95 points or 0.58% to end at 6,019.35.