Markets likely to make a cautious-to-soft start of the day

The Indian markets lost around half a percent in a volatile day of trade in the last session. There were mixed economic news that made the investors worried about their hopes of a rate cut in RBI’s upcoming monetary policy review. While, the IIP number came better than expected, the CPI based inflation moved higher. Today, the start is likely to remain cautious and the trade may start on a flat-to-soft note tailing global cues. Traders will be waiting for the WPI inflation numbers to be announced tomorrow, as it will be the deciding factor for the RBI to go for a rate cut. However, describing the 2.4 percent industrial growth in February as bottoming out of the downturn, government has hoped economic indicators would look up in the coming months. Planning Commission Deputy Chairman Montek Singh Ahluwalia too has said that growth would show improvement in subsequent months. The ailing auto sector may get some support, as heavy industries minister Praful Patel has sought exemption for commonly-used utility vehicles from the 3% additional excise duty proposed in the Budget. The telecom stocks too may remain buzzing, as it has been reported that the Department of Telecom has prepared a notice asking telcos to stop offering 3G roaming in areas where they do not have spectrum by the end of the month.

The US markets mostly made a soft closing on Tuesday, though Dow made modest gains to end higher in nine out of the ten previous sessions. Traders remained on the sidelines, reluctant to make any significant moves lacking any major economic news. Most of the Asian markets have started in red, swinging between gains and losses. The Japanese market has declined after the yen strengthened, as the opposition said it wouldn’t support a pro-stimulus nominee for central bank deputy governor.

Back home, Tuesday’s trading session turned out to be a disappointing session of trade for the Indian equity markets, as market participants booked profit after higher than expected retail inflation numbers dashed hopes that the Reserve Bank of India (RBI) will reduce interest rate in upcoming monetary policy review on March 19, 2013. Retail inflation moved up for the fifth consecutive month to 10.91% in February -- remaining in the double-digit terrain for third month in a row -- on account of higher prices of vegetables, edible oil, cereals and protein-based items. The inflation crossed double digit mark in December at 10.56%, against 9.90% in November. The food and beverages prices grew by 13.73% in January when fuel and light grew by 8.67% and clothing, bedding and footwear prices grew by 10.91%. The rate of increase in the prices of vegetables was as high as 21.29%. The prices of cereals and products went up by 17.04%. Meanwhile, industrial production (IIP), which includes output of factories, mines and utilities, rose an annual 2.4% in January after unexpectedly falling 0.6% in December. It was 1% in the same month of last year. On the global front, other Asian counters too dampened the sentiments as most of them reversed their morning gains and shut shop in the red. Back home, selling resumed in late trade as bleeding continued in interest rate sensitive counters like Banks and Realty since higher-than-expected Feb retail inflation numbers dashed hopes that the central bank will reduce interest rate. Though, the bourses managed to hold their psychological 19,550 (Sensex) and 5,900 (Nifty) levels as some buying was witnessed in defensive FMCG counter. Sugar stocks like Bajaj Hindusthan, Dhampur Sugar Mills, Sakthi Sugars, Balrampur Chini Mills, Triveni Engineering & Industries, Shree Renuka Sugars and Rana sugars all edged higher on reports that the government is likely to consider a proposal on sugar decontrol this week. Finally, the BSE Sensex lost 81.29 points or 0.41% to settle at 19,564.92, while the CNX Nifty declined by 28.25 points or 0.48% to end at 5,914.10.