Markets to get a soft start on the F&O series expiry day

The Indian markets managed a positive close after seven days of losing streak in last session, though the gains were modest as the traders continued booking profits at higher levels. Today, the start is likely to remain cautious and volatility will rule the street owing to F&O March series expiry. While, the global cues are not supportive, traders will be eyeing the domestic developments. The Current Account Deficit numbers slated to be announced later in the day by the central bank for the three months ended December 31 will be closely watched. Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has said that third quarter current account deficit will be higher but it could come down in the fourth quarter. Seprately, Rangarajan has said that India should factor in both the wholesale as well as retail price movements in fashioning its policy response to inflation. Traders will also be eyeing the BRICS summit developments. Meanwhile, the aviation sector is likely to be buzzing as the Director-General of the International Air Transport Association has said that it is important that India gets its aviation policy right. The global airlines’ body has asked the government to improve infrastructure and cut costs and “excessive” taxation on aviation.

The US markets made a mixed closing on Wednesday despite making late recovery. The markets remained under pressure during early trade on profit booking and European concern, as economic sentiment of the region dropped for the first time in five months. Most of the Asian markets have made a soft start and some are trading lower by over a percent in early trade on concern of deepening European crisis. Chinese market was under pressure as the nation’s regulator tightened the rules of wealth management.

Back home, after exhibiting seven days of continuous fall, key domestic benchmark witnessed consolidation with both the frontline indices managed to keep their head above water on Tuesday. Earlier, markets after a quite start gained strength after Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan said that India’s Current Account Deficit (CAD) for 2012-13 is likely to be around 5 percent of the GDP. Rangarajan said CAD is likely to come down in the fourth quarter of the current fiscal, ending March 31 after touching a record high of 5.4 percent of GDP in the July-September quarter. Some support also came in as investors opted to buy defensive stocks such as fast moving consumer goods and pharmaceuticals amid brewing concerns over lack of support to Congress-led UPA government from its key political allies. However, the gains remain capped as investors remained on the side-lines in a holiday truncated week coupled with derivative contracts expiry on March 28. Investors also opted to stay away from piling up positions in risky assets awaiting the release of key macro-economic indicators, viz. current account deficit, balance of payments and trade data, to assess the performance of the economy. Supportive cues from European counters provided the much needed support to local markets in noon trade. Back home, some support also came in from buying in software and technology stocks after the Indian rupee depreciated by 18 paise to 54.35 against the American currency during the trade on fresh demand for the greenback from banks and importers in view of firm dollar in overseas market. However, shares of select public sector undertaking (PSU) banks fell after global rating agency Moody’s downgraded its Standalone Bank Financial Strength Rating (BFSR) for three public sector banks on concerns of falling asset quality, pressure on profitability and capital generation. Additionally, Capital goods stocks extended recent losses on worries that slowdown in the economy could crimp new orders. Shares of BHEL, BEML, ABB and Siemens all edged lower during the trade. Finally, the BSE Sensex gained 23.11 points or 0.12% to settle at 18,704.53, while the CNX Nifty rose by 7.75 points or 0.14% to end at 5,641.60. Indian markets remained closed on Wednesday on account of Holi.