Markets to get a cautious start; IIP data to give direction

The Indian markets continued their bearish trend and ended lower once again in last session. Traders remained cautious on weak auto sales numbers and concerns of rising CAD. Today, the start is likely to be flat-to-cautious  and marketmen will be eyeing the industrial production numbers for December 2012 to be released later in the day. Though, some recovery is expected and the IIP is likely to see some growth after witnessing contraction in last month but the growth is likely to remain muted due to last year's high base effect. Traders will remain cautious, as Reserve Bank Governor D Subbarao has said that inflation which slowed to a three-year low of 7.18% in December, is still high. The auto sector stocks too may remain under pressure after SIAM, the apex body of the Indian automakers after releasing the car sales numbers for January, which declined by 12.5%, has said that industry would miss all growth targets in the current fiscal year. There is likely to be some cheer in the PSU oil marketing companies, as the Finance Ministry has stated that Rs 25,000 crore additional cash subsidy for the fiscal will be given for selling diesel, domestic LPG and PDS kerosene at controlled prices.

There will be lots of important result announcements too, to keep the markets buzzing. ARSS Infra Proj, CESC, Eicher Motors, Fortis Healthcare, Hindustan Copper, HPCL, IFCI, IL&FS Engg and Const, Jindal Steel, Lanco Infra, Lovable Lingerie, Morepen Lab, Motherson Sumi, OIL India, Orbit Corp, Power Grid Corp etc. are among the many to announce their numbers today.

The US markets made a flat start of the new week and the major indices ended marginally lower on Monday. Traders kept an eye on developments in Europe and seemed somewhat reluctant to make any significant moves. Some of the Asian markets have made a positive start after a long weekend, led by the Japanese market which has surged over two percent in early trade after one of the potential contender for the post of Bank of Japan’s governor, said that additional monetary easing can be justified this year, indicating that Bank of Japan could step up more stimulus.

Back home, Indian equity benchmarks, prolonging their southward journey for eighth straight day, ended yet another session slightly in the red on Monday as traders adopted cautious approach ahead of key macroeconomic data such as industrial production and inflation which is expected in the early part of the week. The December IIP data and wholesale price index (WPI) inflation figure are scheduled to be released on Feb 12 and Feb 14 respectively. Choppiness prevailed throughout the session on Reserve Bank of India Governor Duvvuri Subbarao cautioning that the country was headed for the highest ever current account deficit (CAD) this fiscal, after it rose to 5.3 per cent of GDP in the second quarter and expressed concern over the way the CAD was being financed by volatile inflows instead of more foreign direct investments. Selling got intensified after Society of Indian Automobile Manufacturers (SIAM) reported domestic passenger car sales declined by 12.45 per cent to 173,420 units in January, 2013 from 198,079 units in the same month of 2012. Total sales of commercial vehicles declined 9.51 per cent to 63,218 units in January, 2013 from 69,865 units in the same month of previous year. Firm opening in European counters too failed to boost Indian markets. Though, some recovery attempts was seen after Finance Minister P Chidambaram indicated that he would bring in major changes in the Budget to boost equity culture among retail investors and address concerns that this group preferred financial assets over physical ones, mainly gold. But the recovery effort turned futile as profit booking was witnessed on the higher levels. However, the downside remain capped after select public sector undertaking (PSU) companies like Hindustan Copper, HMT, National Fertilisers, RCF, Engineers India and Dredging Corporation of India, which edged higher on the back of heavy volumes after offer-for-sales (OFS) of Oil India and National Thermal Power Corporation (NTPC) got strong response from the overseas investors. Finally, the BSE Sensex lost 24.20 points or 0.12% to settle at 19,460.57, while the S&P CNX Nifty declined by 5.65 points or 0.10% to end at 5,897.85.