Markets to make a flat start lacking any supportive cues

The Indian markets continued their lackluster performance with the start of a new week, though the major indices managed a close of modest gains but the markets lacked confidence. Today, the start is likely to be flat and the trade may remain range bound in the absence of any major cues. There will be cautiousness in the markets as the RBI Governor, D Subbarao  has said that there is a limited scope for easing of monetary policy over the next few months, as there is a risk of inflation escalation as well as concerns over fiscal and current account deficits. Though, the money markets are closed today but the government’s decision to cancel its last bond auction for 2012-13 in view of its improving cash position will boost the sentiments of the traders.The telecom sector will continue buzzing after the Telecom Commission allowed Internet service-providers with broadband spectrum to offer voice services after paying an entry fee of Rs 1,658 crore. There will be buzz in the banking sector too, as the deputy governor of RBI, Anand Sinha has said that the Reserve Bank is likely to come out with the final guidelines for new bank licences much before the end of the fiscal. There will be some important result announcements too, Glaxosmithkl Pharma, Thomas Cook and MidValley Entertainment will be announcing their numbers today.

The US markets remained closed on Monday for the President’s Day holiday, unable to give any cues to the other global markets. Asian markets have made a mixed start, with few of the indices trading lower by about a quarter percent. The Japanese market was trading lower as the yen has strengthened, weighing down the exporters.

Back home, Indian key benchmarks, after hitting 2013 lows in the previous session, ended the Monday’s trade slightly in the positive terrain on Monday amid a supportive Asian trend. Markets, despite initial volatility, traded in the green throughout the session and consolidated near their crucial 19,500 (Sensex) and 5,900 (Nifty) levels. Some support came in from 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 gained 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.  Markets continued their gaining momentum till end supported by infra counter, 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. Rally in PSU shares too supported the northward journey of the markets after strong investor response to the divestment of government’s 9.5 percent stake in NTPC earlier this month. Supportive cues from Asian counters too provided the much needed support to the local markets but investors mainly resorted to profit booking following the decline in European markets. Back home, rally in PSU oil marketing companies too boosted the sentiments in the initial trade as stocks like BPCL, HPCL and IOC edged higher after a hike in petrol and diesel prices was announced on February 15, 2013 after market hours. Petrol prices were increased by Rs 1.50 per litre while diesel prices were increased by 45 paise per litre. However, at the end of trade BPCL and IOC pared all their gains and ended in the red while HPCL ended with marginal gains. Shares related to construction too rose on expectations that the government will provide thrust on infrastructure development in Union Budget 2013-14 to be tabled in the Parliament on February 28, 2013. Finally, the BSE Sensex gained 32.93 points or 0.17% to settle at 19,501.08, while the S&P CNX Nifty rose by 10.80 points or 0.18% to end at 5,898.20.