Markets likely to get a cautious but positive start

The Indian markets had a disappointing close on Friday with benchmarks suffering cut of over half a percent, while there was weak PMI data, the fiscal deficit widened too. Today, the start is likely to be cautious but positive, as the global cues are good, while traders will be eyeing the advanced economic growth estimates for the current fiscal year (FY13) which will be released on Thursday. Auto companies will be in lime light after reporting their monthly sales numbers. Meanwhile, the banking sector is likely to be in focus as the RBI’s new draft guidelines for restructured loans are likely to hit earnings of banks by at least 3-8 per cent over the next two years, as banks would need to step up provisioning on restructured loans by 1 per cent from FY’14 to 3.75 per cent and to 5 per cent by FY’15 on the existing stock of restructured loans. In other development it has been reported that differences have cropped up between the Reserve Bank and the finance ministry over the guidelines for new banking licences, which are likely to be announced within the next fortnight. The IT hardware sector too will be in action as the US Government has objected to India's plans of making it compulsory for Government agencies to source electronic products, including personal computers, printers and tablets, from domestic manufacturers.There will be lots of result announcements, while the Tata Motors and UltraTech Cement shares will be watched after sell order resulting from a software error at Religare Capital Markets caused shares of these two companies to crash by 10% each for a few seconds during the last hour of trade on NSE on Friday.

The US markets rose on Friday taking the Dow above 14k mark after five years. The better jobs data boosted the morale of the investors that the economy is not faltering. The Asian markets have made a good start with some of the indices gaining over half a percent supported by good US data and as Chinese services industries grew at the fastest pace since August.

Back home, Indian equity markets despite a positive opening reversed all their gains and lost momentum in the second half to end below their crucial 6,000 (Nifty) and 19,800 (Sensex) levels with a cut of over half a percent. Investors lacked conviction to open fresh positions amid lots of undermining leads from the domestic markets. India’s eight core sector rose 2.6 per cent in December, lower than the 4.9 per cent posted in the same month a year earlier, dragged down by a decline in coal, natural gas and fertilizer sectors. Sentiments also got hurt after India’s fiscal deficit for the first three quarters of the current financial year touched 78.8 per cent of the budget estimates (BE) of Rs 5.14 lakh crore for the entire financial year ending March 31, 2013. India’s fiscal deficit widened to Rs 4.05 lakh crore ($76 billion) in absolute terms. Selling got intensified after the seasonally adjusted HSBC Purchasing Managers’ Index (PMI), a composite indicator of operating conditions in the manufacturing economy slowed to three months low of 53.2 in January against its previous reading of 54.7 in December, thereby underscoring the risks to Asia’s third largest economy from weak global demand, particularly in Europe. However, global cues remained supportive as European counters traded higher in early deals as encouraging Chinese data boosted investors’ appetite for assets perceived to carry higher risk. Back home, selling in banking counter dampened the sentiments as stocks like ICICI Bank, PNB, SBI, Union Bank of India and IDBI Bank all edged lower after the Reserve Bank of India proposed a steep rise in the provisioning requirement for loan restructuring to five per cent from April 1, against 2.75 per cent at present. Sentiments also remained frail after Oil India ended the session with a cut of about three per cent, after EGoM fixed Oil India OFS base price at Rs 510, at a discount of a little over 5 per cent to its last day’s closing price. However, losses remain capped up to some extent after oil marketing companies like BPCL, HPCL and IOC surged after Oil Minister M Veerappa Moily reiterated that diesel prices will be hiked by 40-50 paise per litre every month till losses on the nation’s most used fuel are completely wiped out. Finally, the BSE Sensex lost 113.79 points or 0.57% to settle at 19,781.19, while the S&P CNX Nifty declined by 35.85 points or 0.59% to end at 5,998.90.