Markets likely to see a modest recovery on supportive global cues

The Indian markets remained in somber mood in last session and after a volatile trade, ended lower by about a quarter percent. Though, the global economic growth remained the primary concern, there wasn’t any support from the domestic front either. Today, the start is likely to be flat-to-positive and some recovery can be seen on a globally accommodative monetary stance. Traders will also be getting some support with Moody’s Investors Service giving thumbs up to Budget 2013, terming it credit positive for the sovereign rating of the country. Also, Finance Minister P. Chidambaram has said that fiscal deficit in the current financial year is likely to be less than the provisional figure of 5.2 percent announced in the national budget last week. The export oriented stocks will be in action, as Commerce and Industry Minister Anand Sharma has said that he is optimistic about India touching the $300 billion-mark in exports this fiscal although it remains a challenge. On the other hand, there will be some buzz in retail related stocks on the report that the Enforcement Directorate is probing the alleged violation of foreign exchange regulations by certain firms engaged in multi-brand retail.

The US markets ended modestly higher on Monday amid worries about China and the ongoing impact of the budget sequester, rebounding from their early losses major indices managed to post some gain in last. The Asian markets are showing all green sign in the early trade and the Chinese market, trading higher by about a quarter percent has recovered from its steep fall of last session,  as government maintained its economic-growth target at 7.5 percent for 2013 while setting a lower inflation goal of 3.5 percent.

Back home, Indian equity indices resumed their southward journey after a day of halt, snapping the day’s trade with a cut of about half a percent due to sluggish global cues. The sentiments remain dampened for the whole day as US lawmakers failed to come to a conclusion to avert the imposition of $85 billion in spending cuts that kicked in on Friday last week. After a horrendous start, key domestic benchmarks tried harder to pare initial losses as sentiments got some boost from finance minister’s promise that his Income Tax Department gumshoes won’t haunt overseas investors for revenues. However, cues from global front continued to dampen sentiments as European counters traded choppy in early deals on concerns about Italy’s political picture. Back home, recovery was seen in the Indian market and most of the initial losses got pared led by gains in blue chip stocks such as Reliance Industries and banking stocks - the only sector that traded in the green. Investors also got some confidence after global rating agency Moody’s Investor’s Service said that India’s budget for the next fiscal year offers a ‘realistic’ plan to meet the country’s fiscal deficit target, and should be a credit positive for its sovereign ratings. But, it was not enough to bring the frontline gauges into the green terrain as optimism got fizzled out after Reserve Bank of India governor D Subbarao said that India’s growth story is still intact, with the potential to grow at double digit rates, provided some issues are addressed, as a mere 5-6% growth is not sufficient. Sentiments also got dented after metal counter dropped by over two and a half percent after the Chinese government late on March 1, 2013, announced fresh measures to cool the property market, including higher down-payments and mortgage rates on second homes in cities with steep price gains. Some pressure also came in after stocks from Capital goods sector like Punj Lloyd, BEML, Bhel, Siemens, Crompton Greaves and L&T all edged lower on worries that a slowing economy will crimp new orders. Finally, the BSE Sensex lost 40.56 points or 0.21% to settle at 18,877.96, while the CNX Nifty declined by 21.20 points or 0.37% to end at 5,698.50.