Markets likely to see some recovery on good global cues

The Indian markets witnessed a volatile day of trade in last session, the unexpected fall in WPI inflation number too was unable to encourage the market participants and they preferred to remain on sidelines due to growth risks in the manufacturing sector. Today a bounce back can be expected on good global cues and recovery may occur in rate sensitives’ as the Reserve Bank of India’s Governor Duvvuri Subbarao has said that the central bank will take note of falling inflation when discussing potential interest rate cuts. Also, the Finance Minister P. Chidambaram has said that he would set up a cell in his office to monitor and resolve the issues for speedy completion of the stalled infrastructure projects. Also, the global rating agency Standard & Poor’s has said that India is projected to grow by 6 percent in the current fiscal, while growth is expected to be steady in most of the Asia Pacific economies.The Aviation and infra sector stocks are likely to remain in action as to improve flow of cheaper funds into key infrastructure sectors, the Reserve Bank of India has eased the norms for external commercial borrowings (ECBs) for the aviation and housing sectors. There will be some buzz in the mining and coal sector too, as the government is set to issue show cause notice to the holders of at least 30 captive coal blocks. 

There will be some important result announcements too, to keep the markets buzzing. Adani Ports, Ballarpur Inds, Care, GVK Power, IRB Infra, J&K Bank, United Spirits and Welspun India are among the many to announce their numbers.

The US markets coming out of last session’s consolidation mood extended their uptrend on Tuesday and ended notably higher with Dow and the S&P 500 surging to new record highs. Traders even ignored the showing a moderate drop in import prices. The Asian markets have made a positive start with most of the indices trading higher by quarter to half a percent, while the Japanese Nikkei 225 climbed above 15,000 for the first time since January 2008.

Back home, after a day of sharp plunge the Indian equity markets went through a choppy session on Tuesday when benchmarks dipped into red for a couple of times despite India's headline inflation coming back in the Reserve Bank's comfort zone, after surprisingly declining to 4.89 percent in April, at its more than three years low. Though sharply lower inflation numbers on the back of the declining price of food items, including fruits and vegetables, may present a case for further monetary policy easing but at the same time the traders were concerned about the increased growth risks in the manufacturing sector, reflected in a sharp drop in core inflation to 2.77 percent from 3.5 percent. Further pressure was exerted on the local markets with the weakness in the European markets with materials and mining companies declining on demand growth outlook from China. Back home, though the local markets ended in green but it was only marginal rise after the big slump of last session, traders never looked confident and every bit of recovery was countered by profit booking. There was a spike up from the lows of the day in a knee-jerk reaction to the unexpectedly lower inflation numbers for the month of April, but the optimism of rate cut got fizzled out soon as the figures of February inflation figures were revised upward to 7.28% from 6.84%. Sectorally, it was the day of healthcare with lots of major companies announcing their numbers Dr Reddy’s, Sun Pharma Advanced Research Company, Pfizer, Elder Pharma, while Dr Reddy’s reported 18% rise in FY 13 profit, Sun Pharma Advanced Research came into black for the fourth quarter,  Pfizer and Elder pharma ended higher ahead of their numbers. Power sector too remained buzzing after the Union Power Minister Jyotiraditya Scindia 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. IT sector too showed some upmove IT industry body Nasscom is targeting a four-fold growth in software product revenues to $10 billion in the next seven years.  Finally, the BSE Sensex gained 30.62 points or 0.16% to settle at 19,722.29, while the CNX Nifty rose by 14.95 points or 0.25% to end at 5,995.40.