Markets likely to see some recovery after a sharp plunge

The Indian markets plunged in the last session, though the major concern was global but the Railway Budget too disappointed and failed to live up to mark. Sentiments remained negative throughout the day and stock markets hit a three month low. Today, the start is likely to be flat-to-positive as the global cues have improved and the domestic markets too may see some recovery. Market will now be eyeing at the Economic Survey to be tabled in Parliament later in the day, the survey is likely to suggest a series of steps to arrest the declining GDP growth, widening Current Account Deficit and  making a strong case for accelerating economic reforms to neutralise domestic and global factors sluggishness. There will be some pressure on the market as the 5% hike in freight rates is going to raise transport costs of commodities such as coal, cement and fertilizers. Realtors and broking firms vying for banking licences may get a reason to cheer, as the  deputy governor of the Reserve Bank of India K C Chakrabarty has said that real estate firms and brokerages will be allowed to open banks if they meet the 'fit and proper' criteria. Meanwhile, there will be buzz in the broader markets as securities market regulator Sebi has ordered a probe into Monday's mid-cap crash that saw some stocks plunging up to 60%, while BSE has reduced the circuit limit for some of those stocks from today.

The US markets ended higher on Tuesday after a sharp selling in the last session. Trade that remained in a somber mood after Federal Reserve Chairman Ben Bernanke’s testimony before the Senate Banking Committee, moved higher on upbeat reports on new home sales and consumer confidence. Most of the Asian markets have made a green start barring Japan, which is down by about a percent as the yen rose against dollar.

Back home, Indian barometer gauges, prolonging their southward journey for fourth consecutive session, witnessed blood bath on Tuesday with both the major indices losing over one and half a percent and closed near their lowest level in almost three months, breaching major crucial support levels 19,150 (Sensex) and 5,800 (Nifty) on feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and continued sliding till end, closing near the lowest point of the day. Selling was both brutal and wide-based as, barring software and technology, none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include oil and gas, auto and capital goods. Sentiments also got dampened as there were no positive surprises in the Railway Budget 2013-14 which was presented by the Railway Minister, Pawan Kumar Bansal in the lower house of the Parliament. Shares of companies like Kernex Microsystems (India), Titagarh Wagons, Kalindee Rail Nirman (Engineers), Hind Rectifiers and Stone India all edged lower. Selling got intensified as European markets made an awful start, with investors seeking safety as Italy faced political deadlock following crucial elections in the indebted euro-zone nation. Back home, Finance Minister P Chidambaram is planning to cut the public spending target for fiscal 2013 by up to 10 percent from this year’s original target, in what would be the most austere budget unveiled in recent history as he tries to avert a sovereign credit downgrade. Adding to the concerns was the Union Budget’s unintended impact on inflationary pressure, which may further dampen the chances for rapid interest rate cuts from the Reserve Bank of India. Selling in Aviation sector too dampened the sentiments. Stocks like Jet Airways, Kingfisher and Spicejet all edged lower on concerns of increased competition after Malaysian budget carrier AirAsia last week announced the launch of its new airline in India in partnership with the Tata Group. Steel and cement stocks also tumbled after the Minister for Railways Pawan Kumar Bansal, announced fuel adjustment component (FAC) linked revision for freight tariff to be implemented with effect from April 1, 2013. Bucking the trend, telecom stocks like Bharti Airtel, Idea Cellular and Reliance Communications edged higher after telecom operators on February 25, 2013 snubbed the 2G spectrum put on the block by the government for the second round of auction. Finally, the BSE Sensex shaved off 316.55 points or 1.64% to settle at 19,015.14, while the CNX Nifty plunged by 93.40 points or 1.60% to end at 5,761.35.