Markets likely to get some recovery dose on supportive global cues

The Indian markets continued to reel under the pressure of political upheaval and suffered cut of another over half a percent in last session. Today, the start is likely to be flat-to-cautious and some recovery can be expected after the recent butchering, as the global markets too have steadied. Traders will get some support from the report that after declining for two months in a row, foreign direct investment (FDI) in India grew by 8 percent year-on-year to $2.15 billion in January. Also, ratings agency Care has pegged India's FY14 GDP growth at 6 percent and has said that the expansion over the current fiscal will also boost bank credit. There is good news for the solar power sector too, as India is likely to see additional installation of 1300 MW to 1400 MW of solar power this year.

The US markets made a bounce back on Wednesday, as the Fed would continue its asset purchase program at a pace of $85 billion a month and traders shrugged off continued uncertainty about the situation in Cyprus after the Mediterranean island nation's parliament rejected a proposed European Union bailout plan. The Asian markets have made mostly a positive start tailing the gains in the US markets and as a private survey showed China manufacturing expanded faster than forecast. Traders were also hoping that Bank of Japan’s new governor may announce a more aggressive policy stance, that took the Japanese index higher by over a percent in early trade.

Back home, Indian equity benchmarks, extending their losses for the fourth straight session, snapped the day’s trade with a cut of over half a percent amid political instability, on concerns that the pace of economic reforms would slowdown after regional party DMK withdrew support from the UPA. Five ministers - MK Alagiri, S S Palanimanickam, D Napoloean, S Jagatrakshakan and S Gandhiselvan have submitted their resignations to the Prime Minister Manmohan Singh on alleged Sri Lanka genocide. The markets, after a cautious start, never looked confident and both the gauges ended the session below their crucial 5,700 (Nifty) and 18,900 (Sensex) levels amid political uncertainty. Though, Finance Minister P Chidambaram tried to soothe market sentiment, stating the government’s reforms agenda was not under threat following the DMK's decision, which could be apparently sensed with the passage of Food Security Bill. Additionally, Reserve Bank of India’s (RBI’s) hawkish guidance in Mid-quarterly policy review that the headroom for further monetary easing remains quite limited continued to weigh on the bourses for the second day in a row. Global markets’ uncertainty also weighed on the sentiment after a bailout plan for Cyprus fell into disarray, although hopes of a last-minute deal kept losses in Asian shares limited. Back home, hefty selling in realty counter dampened the sentiments as stocks like IVRCL, HDIL, Indiabulls Real Estate, DLF and Prestige Estates hit rock bottom on concerns that despite repo rate cut, the financial institutions will not be able to lower interest rates. Selling in telecom stocks, led by Bharti Airtel also weighed on the sentiments. Shares of telecom major, Bharti Airtel dropped after the company’s Chairman and Managing Director Sunil Bharti Mittal was ordered on Tuesday to appear before an Indian court in a case over alleged corruption in allocating mobile phone bandwidth more than a decade ago. Finally, the BSE Sensex lost 123.91 points or 0.65% to settle at 18,884.19, while the CNX Nifty declined by 51.55 points or 0.90% to end at 5,694.40.