Markets likely to make a soft-to-cautious start

The Indian equity markets got some respite with the start of new week and the major indices managed gain of over half a percent in last session. The better than expected monthly inflation numbers soothed the nerves of the investors and raised hopes of a rate cut in RBI’s upcoming policy review. Today, the start is likely to be cautious as the global cues are weak, all eyes will be on the commodities stocks which have suffered sell-off in global markets. Though rate sensitive sectors will remain optimistic after the decline in inflation numbers, Planning Commission Deputy Chairman Montek Singh Ahluwalia has exuded confidence that the price situation would improve further in the coming months. There will be buzz in the coal and infra sector too, as the Finance Minister P Chidambaram has said that the government will set up independent regulators for coal and road sectors in four months. There will be some buzz in the shipping stocks, as the Shipping Ministry has said that it has set a target of awarding 30 projects, entailing Rs 24,633 crore investment, for the current fiscal to add 288.48 million tonne capacity. Power stocks are likely to turn jubilant after the Central Electricity Regulatory Commission (CERC), the electricity regulator directed five state governments to compensate Tata Power for the losses it incurred from importing coal for its 4,000 mw Mundra ultra mega power project (UMPP).Traders will also be eyeing the earnings announcement of Reliance Industries along with few others.

The US markets tumbled on Monday on Renewed economic worries; all the major indices were down by around two percent for the day on disappointing economic data from overseas and as the New York Federal Reserve reported that its index of regional manufacturing activity fell by more than expected in April. Most of the Asian markets have made a soft start with some of them witnessing cut of over one percent, amid concern over the slower economic growth in China impacting the global economic recovery.

Back home, a day after taking a nasty laceration of over one and a half percent, Indian equity benchmarks snapped the Monday’s trade with a gain of over half percent with frontline indices re-conquering their crucial 5,550 (Nifty) and 18,350 (Sensex) levels as March inflation eased. Markets started the day’s trade in the negative terrain following weak global cues but, turned green on the back of 40-month low inflation data, which strengthened the case for rate cut in Reserve Bank of India’s (RBI’s) May 3 Policy Review. The wholesale price index, India’s key inflation measure, slowed to 5.96 percent in March, the lowest rate since November 2011 after an annual uptick to 6.84 percent in February. Investors’ sentiment also got underpinned by the reports suggesting gold imports that contribute significantly to ballooning Current Account Deficit (CAD), falling nearly 24% in the first quarter and probably dropping at the same pace in April. Meanwhile, traders’ shrugged off feeble global cues as European counters opened in the red, led lower by mining stocks after weaker-than-expected economic data from China - the world’s top metals consumer - raised doubts over the pace of the global economic recovery. Back home, banking space rallied as slowing wholesale price inflation raised rate cut expectations. Some strength also came in from buying in public sector oil marketing companies (OMCs) viz. IOC, BPCL and HPCL after US crude oil futures dropped below $90 a barrel mark for the first time in more than a month as economic growth unexpectedly eased in China, the world’s second-largest crude oil user. PSU counter too witnessed traction and garnered a gain of about one and a half percent on report that Indian PSUs are expected to witness a turnover of more than $1 trillion by 2020 and a large part of the growth will be attributed to investments in modern forms of IT including cloud, big data and mobility. Finally, the BSE Sensex gained 115.24 points or 0.63% to settle at 18357.80, while the CNX Nifty rose by 39.85 points or 0.72% to end at 5,568.40.