Markets to attempt a bounce back on good global cues

The Indian markets showed a range-bound trade in last session and the major indices despite some recovery attempts in the second half closed marginally in red. Today, the start is likely to be in green, tailing good global cues and the markets are likely to attempt a bounce back. Traders will get some support with the Asian Development Bank’s (ADB) outlook. In an improvement over disappointing numbers last year, ADB has said that domestic consumption could boost India’s slowing economy to 6 percent growth this year, but the country may still fail to reach that level if it does not follow through on reforms to encourage investment. It has also forecast inflation to ease to 7.2 percent this year from 7.5 percent last year. Also, Finance Minister P Chidambaram has said that over 340 projects, including 125 new projects are held up for some reasons and has expressed his commitment to remove bottlenecks hampering their implementation. The telecom stocks will keep buzzing with the Supreme Court granting temporary relief to Bharti Airtel in the 3G roaming case. There will be some pressure on steel sector after the report that India’s steel consumption grew by just 3.3 per cent in 2012-13 fiscal to 73.3 million tonnes as demand remained subdued.

The US markets ended higher on Monday, recovering from the early session weakness. Traders picked up stocks at reduced levels ahead of the unofficial start of earnings season with the results of Alcoa after market hours.  Most of the Asian markets have made a positive start supported by the report of easing inflation in China from a 10-month high. Japanese market too was trading higher as the yen continued to weaken further.

Back home, Indian equity benchmarks snapped the volatile day of trade on a lackluster note as the frontline indices hardly budged from their previous closing levels on Monday. The key indices oscillated in an extremely tight range through the session and ended slightly in red as market participants remained on the sidelines lacking conviction amid weak macro-economic situation coupled with global growth woes. Market participants also remained on sidelines ahead of Industrial production numbers, which is due later this week, as IIP data is likely to be a key input for Reserve Bank of India’s next policy review on May 3. Sentiments also got hurt after RBI Chief stated that India’s current account deficit is unsustainable at its present level of about 5% of gross domestic product (GDP) and a deficit of about 2.5% of GDP will be sustainable, indicating that central bank will not change key policy rates in the next monetary policy.  On the global front, European counters traded firmly in the early session as investors remained optimistic on further stimulus hopes ahead of major meetings across the region. Back home, foreign institutional investors (FIIs) sold Indian shares for three straight days after buying over $10 billion so far this year. The selling comes amid worries about the domestic economy and on lingering concerns about political stability. Selling in software pack too dampened the sentiments. Infosys stock declined by over a percent, on concerns ahead of April 12 earnings and as weak US non-farm payrolls raised questions about the health of the US economy, the sector’s biggest revenue generator. Though, the losses remain capped as market-men got some support with Chief Economic Advisor Raghuram G Rajan expressing optimism of the economy growing by over 6 percent during the current fiscal. Stocks from power sector remained on buyers’ radar after Finance Minister P Chidambaram stated that the Cabinet will take a view on price pooling of coal to address the fuel supply issue. He also said that price pooling may assist in addressing the supply of fuel in a reasonably satisfactory manner. Meanwhile, telecom sector stocks like Bharti Airtel and Idea Cellular edged higher after the Supreme Court allowed the telecom companies to continue 3G pacts until next hearing on April 11. Finally, the BSE Sensex lost 12.45 points or 0.07% to settle at 18,437.78, while the CNX Nifty declined by 10.30 points or 0.19% to end at 5,542.95.