Markets to get a soft start on sluggish global cues

The Indian markets consolidated in last session, though there was not much to support the markets and they barely managed to close in positive terrain. Today, the start again is likely to be in red on subdued global cues and major indices may gyrate lower before stabilizing. Markets will be buzzing with the report that in an attempt to rein in surging demand for gold, a preferred investment option among Indian consumers, the government has raised the duty to 8% from 6%. Traders will also be eyeing the market heavyweight Reliance Industries (RIL) for any clues regarding its future course of action in its 39th Annual General Meeting scheduled to be held today. Pharma stocks are likely to get some boost with the report that Pharma exports grew by 10.55 percent year-on-year to $14.6 billion during the financial year 2012-13, compared to 13.2 billion during 2011-12. Steel sector too may keep buzzing, as the country has logged 5.86 percent growth in production in 2012-13 by producing 78.12 million tonne (MT) steel during the fiscal as against 73.39 MT in 2011-12, the highest among major global producers.

The US markets suffered sharp selling on Wednesday and slipped to their lowest levels in a month on getting mixed economic data. ADP reported a weaker than expected private sector job growth in the month of May, raising concerns about Friday’s monthly jobs report. However, the ISM’s non-manufacturing index edged up to 53.7 in May from 53.1 in April. The Asian markets have mostly started in red on weak US data, though the Japanese market has bounced back as the yen weakened against other major currencies.

Back home, key domestic benchmarks witnessed consolidation with both the frontline indices managed to keep their head tad above water on Wednesday. Buying which emerged in second half, largely on the back of short-covering in oil and gas and realty sectors, mainly acted as saving grace for domestic equity markets and helped them to hold crucial 5,900 (Nifty) and 19,550 (Sensex) levels. Earlier, markets made a negative start tailing weak global cues, but sentiments got some strength and turned positive after India’s HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies, came at 53.6 in May, up from 50.7 in April. Indian services activity, which make up nearly 60% of country’ economics output, expanded in May at its fastest pace since February as burgeoning new orders drove optimism to a five-month high.  Some support also came in from Chief economic advisor Raghuram Rajan’s statement that despite the disappointing GDP growth there was enough in the details to give hope that economy will look up. He expressed hopes on good rabi crop that will come to market in the first quarter, higher government spending and strong finance, real estate and insurance sector. However, global cues remained somber as European counters traded lower in early deals after lackluster manufacturing data from the US and China stoked growth concerns in the world’s two largest economies. Back home, buying in oil and gas counter, largely supported by ONGC and Reliance Industries, also lifted the sentiments. Significant bounce back in Realty pivotal too helped the benchmarks to end higher. Shares of fertilizer companies like National Fertilizers, Chambal Fertilisers, Rashtriya Chemicals and Fertilisers, Tata Chemicals and Coromadel International edged higher on reports that a group of ministers will meet on June 5, 2013, to discuss a new urea pricing policy for existing producers of the fertilizers. Just Dial, the new listing too got good response from traders and ended with a premium of over 15 per cent. However, the gains remain capped as shares of cement companies like ACC, Ambuja Cement, Ultratech Cement and India Cements remained under pressure on concerns over slowdown in demand following the onset of monsoon rains. Finally, the BSE Sensex gained 22.44 points or 0.11% to settle at 19,568.22, while the CNX Nifty rose by 4.40 points or 0.07% to end at 5,923.85.