Markets to get a dose of recovery on good global cues

The Indian markets continued their somber run on Tuesday, declining for the fourth consecutive session. Traders remained concerned about the global economic and political conditions, while there was not much on the domestic front that could have helped the markets on upside. Today, the start is likely to be good and the markets may recover from their continuous fall on good global cues. There will be buzz in the PSU sector especially NTPC after an empowered group of ministers (EGoM) led by finance minister P Chidambaram met to finalise the timeline and pricing of the issue. The NTPC disinvestment is scheduled for February 7 and is expected to raise Rs 12,000 crore. Coal and power sector too will be in action as the Cabinet Committee of Economic Affairs (CCEA) on Tuesday gave an ‘in-principle’ nod for the coal pool pricing mechanism. While, in other development, Centre and the states agreed that states would invite open competitive bids for procuring electricity in the next six months to bridge supply shortfall.

Also, there will be lots of important result announcements to keep the markets buzzing. Apollo Tyres, Astrazeneca Pharma, Cipla, Godrej Inds, India Glycols, Honeywell Auto, Hikal, IRB Infra, Jindal Saw, JK Lakshmi Cem, MOIL, Procter & Gamble, RPG Life, TBZ, Tech Mahindra and Welspun India are among many to announce their numbers today.

The US markets made a smart bounce back on Tuesday after a sharp plunge in last session. There was value buying supported by service sector growth data from domestic front as well as from across the globe. The ISM report showed that activity in the US service sector continued to expand in the month of January. Asian markets have made a mixed start and some of the indices are trading in red, however the Japanese market has surged near its four year high after Bank of Japan Governor Masaaki Shirakawa said that he will step down on March 19, three weeks before his term was due to expire, that may help Japanese Prime Minister Shinzo Abe’s campaign for aggressive easing.

Back home, Indian equity indices, extending their losses for the fourth straight session, snapped the day’s trade with a cut of about half a percent due to sluggish global cues. Discouraging US factory orders coupled with worries that the political uncertainty could impede the euro zone’s efforts to resolve the debt crisis in the region dampened the investors’ sentiments. However, the key gauges found strong support around the crucial 5,950 (Nifty) and 17,650 (Sensex) levels and spent the whole session consolidating their positions around those levels. Asian markets shut shop mostly in the red as investors took profits from recent rallies, while the yen got a respite from broad-based selling. Back home, some recovery was seen in the market as sentiments got support from India’s services sector data which logged a growth at its strongest pace in year during January. Marking a 45-month expansionary sequence, the seasonally adjusted HSBC Services Business Activity Index came at 57.5 in January, up from 55.6 in the previous month. But, it was not enough to bring the frontline gauges into the green terrain as optimism got fizzled out on concern that PSU disinvestment and reduction of promoter stake to meet the Securities & Exchange Board of India (SEBI) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. Sentiments could not firm up despite Finance Minister P Chidambaram reiterating his commitment to controlling spending, especially at a time when India faces fiscal and current account deficits. Traders also remained cautious ahead of advanced economic growth estimates for the current fiscal year (FY13) which will be released on Thursday. Some pressure also came in from banking counter as the sector tumbled over half a percent on the back of RBI’s new draft guidelines for restructured loans which are likely to hit earnings of banks by at least 3-8 per cent over the next two years. Finally, the BSE Sensex lost 91.37 points or 0.46% to settle at 19659.82, while the S&P CNX Nifty declined by 30.35 points or 0.51% to end at 5,956.90.