Markets likely to make a weak start on feeble global cues

The Indian markets suffered sharp profit booking in the last session with major indices losing over half a percent. Today, the start is likely to remain in red and gap-down opening too cannot be denied on the worries of Europe. From the domestic front there will be cautiousness in the markets ahead of the RBI’s policy announcement tomorrow. The private sector banks are likely to remain under pressure with a sting operation exposing money laundering, the Finance Ministry and Reserve Bank of India are investigating allegations, while the Reserve Bank of India governor Duvvuri Subbarao will meet select bank chief executives on Thursday to discuss risk-based supervision of banks. There will be some solace for the manufacturing sector, as a Boston Consulting Group report has said that India may become the fifth-largest manufacturing nation - from the present ninth - if it is able to increase the share of manufacturing in GDP to 25 per cent. There will be some buzz in the telecom sector too, as the government has asked CDMA telecom operators to pay a one-time fee, amounting to about Rs 3,033 crore, for the spectrum they hold beyond the initial frequencies that were allocated to them. However, the operators will have an option to pay these charges in equal annual instalments in a manner that the last one ends one year before their licences expire.

The US markets declined on Friday, losing their gaining streak on report of a drop in consumer confidence, however the losses remained limited as the Federal Reserve reported that industrial production increased by more than expected in the month of February. The Asian markets have made a mixed start with most of the indices in the region trading in red on concern that an unprecedented levy on bank deposits in Cyprus will plunge Europe back into crisis. Japanese and Chinese markets have slipped to their more than two months low.

Back home, Indian stock markets resumed their southward journey after a day of halt with both the frontline indices snapping the session below their crucial 5,900 (Nifty) and 19,450 (Sensex) levels. The downfall was transpired due to brutal selling in rate sensitive counters like, realty, banking and auto, ahead of the crucial mid-quarterly policy review of the RBI next week, as continuing inflationary pressure dampened the hope for rate cuts by the central bank. Though, markets traded in the green in most part of the morning session but, entered into negative trajectory after S&P said that the slowdown in India’s economic growth is less supportive for the country's sovereign credit ratings, and the government may find it challenging to meet the revenue projections of its 2013/14 budget. S&P rates India at ‘BBB-‘, one notch above junk, and had cut its outlook to ‘negative’ from ‘stable” last year, denoting a one-in-three possibility of a ratings downgrade. Selling got intensified after nervous market participants’ resorted to ruthless across the board profit booking following the disappointing start of European stock markets. Back home, cautiousness gripped the markets as the chief economic advisor Raghuram Rajan said that it was too early to say that the economy had recovered despite the improvement in some key numbers. Selling in banking stocks too dampened the sentiments, as stocks like ICICI Bank, HDFC Bank, SBI, Axis Bank, Indusind Bank, Bank of Baroda and Yes Bank all edged lower following accusations of money laundering. The news portal Cobrapost played the contents of purported video recording of officials of HDFC Bank, ICICI and Axis Bank allegedly agreeing to receive unverified sums of cash and putting them in their investment schemes and benami accounts in violation of anti-money laundering laws. However, the losses remained capped upto certain extent as some buying was witnessed in the software pack as stock like Tech Mahindra, HCL Technologies, Wipro and Infosys edged higher on positive economic data in the US, the biggest outsourcing market for the Indian IT firms. Rally in public sector oil marketing companies too capped the downfall. Stocks like BPCL, HPCL and IOC all edged higher on reports diesel price may be hiked by 40-50 paisa a litre from 15-16 March 2013. Finally, the BSE Sensex lost 142.88 points or 0.73% to settle at 19427.56, while the CNX Nifty declined by 36.35 points or 0.62% to end at 5,872.60.