Markets to get a cautious start; WPI data to give direction

The Indian markets suffered a sharp sell-off in the last session with the benchmarks losing the majority of their last week gains on weak sentiments and profit booking along with some political jitters. Though, there was some correction expected but the massive sell-off was led by factors like the ballooning trade deficit and global trends. Rise in the trade deficit dented the market’s hope that the current account deficit (CAD) situation would significantly improve. Today, the start is likely to remain cautious, though some recovery is expected after the plunge of last session. Traders will be eyeing the Wholesale Price Index (WPI) inflation data, which likely rose 5.40% from a year earlier in April, slower than the 5.96% increase in March. The numbers will also guide the bond market where the governments of India bonds are trading at an almost three-year high on hopes of rate cut and government buying. There will be some buzz in the power sector, as the Union Power Minister Jyotiraditya Scindia has said that India’s transmission capacity during the 12th Five-Year Plan period ending FY 2016-17, is expected to go up from 28,000 megawatts to 65,000 megawatts, making it the largest grid in the world.

There will be lots of important result announcements too, to keep the markets buzzing. Dr Reddy Laboratories, Pfizer, Reliance Infrastructure,Sun Pharma Advanced Research Company, Elder Pharmaceuticals, HT Media, Suven Life, Muthoot Finance, United Bank of India, V-Guard Industries and Whirlpool will be among the many to announce their numbers today.

The US markets made a flat closing on Monday after a choppy trade, though upbeat retail sales data limited any downfall chances. Retail sales inched up by 0.1 percent in April following a revised 0.5 percent decrease in March. The Asian markets have started mostly in green on Tuesday tailing the encouraging sign of retail sales from the US, which buoyed the earnings outlook of the exporters in the region. However, the Chinese market was trading marginally in the red ahead of the FDI data to be released later in the day.

Back home, Indian markets witnessed butchery on Monday with both the major indices losing over two percentage points, a biggest fall since May 8, 2012, breaching crucial support levels, 19,700 (Sensex) and 6,000 (Nifty) on profit booking after a sharp gains last week. A gap-down start of markets never looked in recovery mood and continued sliding till end, closing near the lowest point of the day. Selling was both brutal and wide-based as none of the sectoral indices on BSE were spared. Meanwhile, counters which featured in the list of worst performers include fast moving consumer goods, capital goods and metal. Market-participants remained anxious after Reserve Bank of India’s investigations report, which reportedly pointed out anomalies in banks related to the Cobrapost expose. Web portal, Cobrapost, in its string of exposures has alleged money laundering and other wrong doings by several public sector banks and financial institutions ranging from the country's largest bank SBI to the youngest lender Yes Bank. Traders also shrugged off better than expected CPI figures for the month of April, which came in single digit at 9.39% as against 10.39% seen in the previous month. The decline was despite the double digit growth of food inflation for consumers, which rose an annual 10.61% in April, nevertheless, slower than an annual rise of 12.42% in March. Selling got intensified after India’s April trade deficit rose to $17.8 billion mainly on the back of surge in gold imports, thereby increasing concerns about the current account deficit in Asia's third largest economy. The country’s trade deficit has widened in the month of April to $17.8 billion, as compared to $14 billion, up by 27.1% year-on-year. While, exports were up by 1.6% at $24.16 billion and imports rose 10.9% to $41.95 billion year-on-year. Global cues too remained choppy, back home, disappointment in the market also crept in with Bank of Baroda’s fourth quarter earnings. The stocks plunged over 2.5% after the net profit for the quarter ended March 31, 2013 declined by 32.23% at Rs 1028.85 crore for the quarter, as compared to Rs 1518.18 crore for the quarter ended March 31, 2012. Sentiments also remain dampened after an ASSOCHAM survey stated that owing to demand slowdown, the contribution of the manufacturing sector in the country's Gross Domestic Product (GDP) may fall below 15 percent in 2013-14. Finally, the BSE Sensex shaved off 430.65 points or 2.14% to settle at 19,691.67, while the CNX Nifty plunged by 126.80 points or 2.08% to end at 5,980.45.