Markets to make a flat-to-positive start on supportive regional cues

The Indian markets despite a volatile day of trade managed a close marginally in green in the last session. Though, the economic news remained disappointing but the spurt in some sector specific stocks led the markets into green. Today, the start is likely to be positive, tailing the gains in the regional peers. Finance Minister P Chidambaram saying that the Indian economy is capable of absorbing $50 billion foreign direct investment (FDI) annually is likely to keep the morale high of the foreign investors. However, the finance Minister has also said that containing fiscal deficit, current account deficit and inflation are big challenges that the country is facing currently. The fertilizer stocks will be in action today, as the Union Cabinet is likely to discuss a proposal to fix the subsidy for non-urea phosphatic and potassic (P&K) fertilisers for the 2013-14 fiscal. The Auto sector will remain in a submissive mood as passenger car sales for March fell over 20% led by an across-the board sharp decline posted by leading car makers. PSU oil marketing companies too will be in action after reducing the petrol and non-subsidised LPG prices.

The US markets closed lower on Monday giving back some last week gains. Trade remained subdued since beginning on disappointing manufacturing data which overshadowed a separate report from the Commerce Department, showing a notable rebound in construction spending. Most of the Asian markets have made a positive start, however the Japanese market was again trading lower as the yen rose after the weak US manufacturing data.

Back home, Indian equity benchmarks started the new financial year slightly on the positive side with frontline indices ending the session re-conquering 5,700 (Nifty) and 18,650 (Sensex) levels as investors opted to invest in beaten down fundamentally strong stocks. Earlier, markets started trading in fine fettle on optimism over Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that the Cabinet Committee on Investments (CCI) is expected to give its nod for a number of projects within the next three weeks. Besides, the Environment and Forests Ministry had also informed CCI that it had initiated steps for speedy approval to infrastructure projects, stuck for want of green nod. But, the bourses started relinquishing their gains on account of accentuated selling pressure following the release of 16 months low factory output figures. The seasonally adjusted HSBC Purchasing Managers’ Index, a composite indicator of operating conditions in the manufacturing economy slowed to 52 in March against its previous reading of 54.2 in February, thereby underscoring shrinking domestic and foreign demand. Deceleration in new orders and power outages mainly slowed the growth momentum in the manufacturing sector. Some selling also emerged after eight core sectors output fell 2.5% in February, against a growth of 3.1% in the previous month and a whopping 7.7% expansion in February, 2012, dashing the hope of policy makers that the industry will revive in the third quarter of the current financial year. The eight core sectors, which have a weight of 38% in the Index of Industrial Production, saw five of them registering a contraction in February year-on-year. Global cues too remained sluggish as most of the Asian markets ended the trade in red terrain as sentiments in the region got dampened after Chinese factory data missed market expectations. Back home, buying in pharmaceutical stocks provided some strength to the bourses. Shares of stocks like Natco Pharma, Cipla and Ranbaxy surged 2-5% after the Supreme Court dismissed Novartis Glivec Patent Petition. In a landmark judgment that has the potential to change the direction of India's pharmaceutical business, the Supreme Court said that the drug failed to qualify for a patent according to Indian law. Additionally, buying in Aviation space too supported the sentiments after some media reports suggested Oil PSUs slashing Aviation Turbine Fuel or ATF prices by a steep 5.5%. However, gains remain capped as selling witnessed in Auto pack after some companies reported lower than expected March sales numbers. Finally, the BSE Sensex gained 28.98 points or 0.15% to settle at 18,864.75, while the CNX Nifty rose by 21.85 points or 0.38% to end at 5,704.40.