Indian markets to reel under global pressure with a weak start

The Indian markets showed a disappointing performance in the last session and major indices after remaining range bound for most part of the day, lost their way in the final hours to end lower by over one percent. Today, the start is likely to be soft on feeble global cues. North Korean tremor is likely to impact the Indian markets too. Though, Prime Minister Manmohan Singh has indicated that the government will further liberalise the FDI regime in the coming months and push the land reform measures. He has said that the private sector needs an environment in which enterprise can flourish and create both jobs and stimulate growth to ensure that it remains inclusive.Trade will also remain cautious as the Capital market regulator Sebi has voiced concerns over an alarming rise in grey market investments with thousands of crores being raised through illegal means. The power sector stocks will remain buzzing as the Prime Minister has said that efforts are on to resolve fuel supply issues faced by the power sector in a time-bound manner and has hoped to see results in the next three weeks. Steel stocks will see some action on reports that leading steel makers are mulling price hike.

The US markets once again ended lower on Wednesday on getting disappointing economic data. Stocks moved sharply lower after ADP reported that private sector employment rose much less than expected, while the ISM non-manufacturing index dipped in March along with a weak service sector growth. Most of the Asian markets have made a weak start and some are even lower by around two percent in early deals on worse than expected data from US and concerns about North Korea which is much closer to putting a nuclear warhead on a missile.

Back home, snapping their four sessions northward journey, key domestic benchmarks showcased a terrible day of trade with both the frontline indices shaving off about one and a half percent, tumbled below psychological 5,700 (Nifty) and 18,850 (Sensex) levels. Sentiments in the session got undermined not only by the dismal cues from global markets but also from disappointing domestic economic indicators. Investors’ mood got dampened after growth in services sector, which make up nearly 60% of country’s economic output, eased in March to its slowest pace in 17 months. The HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies fell to a 17-month low of 51.4 in March from 54.2 in February. Similarly, reflecting the weakest improvement in operating conditions, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, declined to 51.4 in March from 54.8 in February. Selling got intensified and benchmarks plunged deep into the red in last hour of trade on political uncertainty that Lok Sabha elections could be held earlier than scheduled, even this year. Sentiments also remained jittery after European counters traded choppy in the early deals as investors remained cautious ahead of key events later in the week. Back home, selling in auto stocks too dampened the sentiments after reporting disappointing March sales numbers as demand weakened on the back of economic slowdown and consequently weak consumer and business sentiments. Markets continued their downward movement despite Prime Minister Manmohan Singh’s statement that downturn was passing and urged the business leaders to keep faith in his government's efforts. Sentiments also got hurt after sugar stocks like Balrampur Chini, Shree Renuka Sugar, Bajaj Hindusthan, and Triveni Engineering gave up their previous session’s gains as the Cabinet Committee on Economic Affairs (CCEA) on April 02 did not take up the proposal to decontrol the sugar sector, as Finance Minister P Chidambaram is away on a foreign tour. However, some power sector stocks were able to buck the trend after the power regulator CERC allowed the power utility, Adani Power to raise tariffs for electricity on a temporary basis. The order boosted other power companies, raising hopes for a similar reprieve for them too. Finally, the BSE Sensex lost 239.31 points or 1.26% to settle at 18,801.64, while the CNX Nifty declined by 75.20 points or 1.31% to end at 5,672.90.