Markets likely to make a soft start; GDP data eyed

The Indian markets lost their way in the second half of last session and despite a good start ended marginally in red. The mood is likely to remain somber and the markets may get a flat-to-soft start today. Traders will be eyeing the economic growth estimates (GDP) for the current fiscal year (FY13) which will be released later today by Central Statistical Office. The GDP numbers are likely to remain around 5.5%, below the finance ministry's estimate of 5.8%. There is likely to be cautiousness as net direct tax collections during April-January this fiscal saw a slower pace of growth at 12.49% as against the budgeted annual target of 15%. Meanwhile, Finance Minister P Chidambaram has asserted that a sustained high rate of economic growth is a prerequisite for India to become a comprehensive national power. The gold loans related stocks will continue to remain under pressure, as the working group set up by the Reserve Bank of India has suggested banks to increase their gold jewellery loans portfolio to curb large imports of gold.

There will be lots of important result announcements along with cement majors to keep the markets buzzing. ACC, Ambuja Cements, Apollo Hospitals Enterprise , Aurobindo Pharma, Ceat, Dhampur Sugar Mills, Gillette India, Great Eastern Shipping Company, Hathway Cable & Datacom, Jai Corp, JM Financials, MRF, PC Jewellers , Pfizer , Subex and Zydus Wellness are among the many to announce their numbers today.

The US markets witnessed a choppy day on Wednesday and the major indices ended flat. Uncertainty about the financial situation in Europe coupled with concern about the outlook for the domestic markets weighed on the sentiments. The Asian markets made mostly a lower start, as the Japanese market after their last session’s rally have given up its gains and was down by over a percent. The Chinese market too was down for the first time in the last nine days on concern the government may accelerate measures to curb property-price gains.

Back home, reversing all the early gains, key domestic benchmarks witnessed consolidation on Wednesday with both the gauges snapping the session on a flat note rather with negative bias, as investors booked profit ahead of advanced economic growth estimates for the current fiscal year (FY13) which will be released on February 7, 2013. The bourses traded in fine fettle for most part of the day buoyed by firm global cues. Moreover, some support also came in from interest rate sensitive realty space which extended recent gains as many banks cut lending rates after the Reserve Bank of India (RBI) announced a 25 basis points reduction in its key policy rate viz. the repo rate after a monetary policy review on January 29, 2013. Supportive cues from US markets provided the much needed support to local markets in the first half. Back home, investors turned nervous in the late trade and sentiments got dampened as stocks from power sector turned negative after a decent run, despite Cabinet Committee of Economic Affairs (CCEA) giving 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 the supply shortfall. Cautiousness in the markets also crept in after International Monetary Fund (IMF) said that Indian economy is growing at a rate of 4.5 per cent in 2012-13 (at market prices), much less than the big economies of ASEAN such as Indonesia and the Philippines, and even Bangladesh. Selling got intensified in late trade as Jewellery stocks, viz, Rajesh Exports and Titan Industries declined after RBI said it would consider imposing value and quantity restrictions on gold imports by banks, which account for 60 percent of India’s imports of the yellow metal, under extreme conditions, as the world’s biggest consumer of gold battles a record high current account deficit. However, losses remained capped after sugar sector stocks witnessed traction on reports that food minister will seek a cabinet approval for sugar decontrol, a first proposal that will be taken to the highest decision-making body of the government since the sector was brought under strict regulation 50 years ago. Finally, the BSE Sensex lost 20.10 points or 0.10% to settle at 19639.72, while the S&P CNX Nifty rose by 2.30 points or 0.04% to end at 5,959.20.