Markets to get a flat start, likely to see recovery in the latter part of trade

The Indian markets made a soft closing on Friday making it a third straight week of declines, traders remained concerned about the economic outlook. Today, the start is likely to remain cautious though some recovery can be expected in the latter part of the trade. Marketmen are likely to get some support from the Planning Commission Deputy Chairman Montek Singh Ahluwalia's statement that Indian economy would grow at a rate between 5 and 5.5 per cent in the current financial year and could expand by seven per cent in 2013-14. On the same time the FIIs and domestic investors are likely to gain courage with a Mauritian minister saying that there is definite political will in India and Mauritius to conclude a revised tax treaty so as to prevent misuse of bilateral provisions governing investments, while routing of funds into and from India through the island nation. There will be buzz in infra companies, as National Highways Authority of India (NHAI) is seeking to push a 'relief package' for road developers and the Prime Minister’s Office will be considering ways to revitalize the highway sector.

The US markets made a mixed closing on Friday as some good economic news were overlooked amid weak retail sales numbers.The trade remained choppy as traders continued to express uncertainty about the near-term outlook for the markets. The Asian markets have made a mixed start, Chinese market was in green after a long holiday, while the South Korea’s Kospi Index was trading lower as data showed the nation’s producer prices fell by the most in more than three years. Though, the Japanese market has surged after the Group of 20 nations refrained from censuring the nation’s policies that have weakened the yen.

Back home, pressurized by weak global cues, Indian equity benchmarks snapped Friday’s trade in the red terrain with both the gauges hitting seven and a half week low. The frontline indices traded choppy throughout the day and extended their southbound journey for second straight day, however the recovery in the late trade minimized the extent of damage for the bourses. The psychological 5,850 (Nifty) and 19,400 (Sensex) levels proved as strong support as the benchmarks rebounded after hitting intraday lows. Sentiments remain dampened from the beginning of the trade as investors reacted negatively to the SEBI’s action of imposing a total penalty of Rs 30.75 crore on 118 entities, including the promoters of erstwhile Bank of Rajasthan (BoR), for manipulative practices in the stock market. Lower-than-expected quarter earnings by some blue-chip companies also triggered selling. Global cues too remained unsupportive as disappointing news from Germany’s economy sent European markets lower. Back home, selling got intensified in the mid noon trade after global rating agency Moody’s warned that India’s expanding current-account deficit and external debt will make the country more vulnerable to international financial volatility and have negative implications for its sovereign credit profile. Sentiments also got dampen after realty sector ended slightly in the red after realty major DLF, reported a 10.1 percent growth in the December quarter from Rs 258.35 crore a year ago to Rs 284.80 crore, which missed market expectations. However, some recovery was witnessed in late trade to help the frontline indices to pare most of their initial losses as investors started piling up positions in rate sensitive like Auto and Banking on hopes that weak industrial growth and better inflation data will prompt RBI to go for more rate cuts. Rally in sugar stocks too supported the sentiments after the food minister said that the decision on partial sugar decontrol is likely in the next 15 days. Finally, the BSE Sensex lost 29.03 points or 0.15% to settle at 19,468.15, while the S&P CNX Nifty declined by 9.55 points or 0.16% to end at 5,887.40.