Markets to get a cautious start, may see some recovery in late trade

The Indian markets were unable to get any respite in last session and lost another about half a percent, while on one hand rupee made a comeback on some RBI intervention and policy measures, on the same time the weaker than expected macro economic data dampened the mood of the traders. Today, the start is likely to remain cautious as the global cues are still muted, though some recovery can be expected in latter trade and marketmen may get some encouragement with Fitch Ratings revision of India’s Outlook to Stable from Negative and affirmation of ‘BBB-‘ rating. Fitch further said it expects the economy to recover modestly to 5.7% and 6.5% in FY14 and FY15 respectively. FII’s too may cheer after the government announced a hike in the foreign investment limits in government debt by $5 billion in order to reverse the outflow of FII funds from debt instruments. Oil & Gas sector stocks will be in action, as the Oil Minister M Veerappa Moily has said that the revision in rates of natural gas prices was a contractual requirement which will help remove policy uncertainty. There will be some buzz in the infra sector too, as the government is mulling to raise money overseas by a bond sale to NRIs to support infrastructure finance needs.

The US markets extended their plunge in last session after failing to sustain an initial upward move. Though, it was another quiet day on the US economic front and lacking any major economy report some traders preferred staying on the sidelines. Most of the Asian markets have made a soft start, while the Japanese market was witnessing sharp cut of over three percent in early trade as the investors were still mulling for stimulus and after the World Bank cut its global growth forecast.

Back home, pressurized by weak global cues, Indian equity benchmarks snapped the Wednesday's trade in the red terrain with both the gauges snapping the session with a cut of about half a percent. The frontline indices traded choppy throughout the day and extended their southbound journey for second straight day, however the recovery in the second half minimized the extent of damage for the bourses. The psychological 5,750 (Nifty) and 19,000 (Sensex) levels proved as strong supports as the benchmarks rebounded after hitting intraday lows. Sentiments remain dampened from the beginning of the trade and extended its southward movement after government data showed lower-than-expected index of industrial production for April. India’s annual industrial output growth measured by index of industrial production (IIP) grew by 2 per cent for the month of April 2013, lower than street’s expectation and previous month’s figure of 2.5 per cent. Moreover, higher-than-expected May consumer price inflation data also triggered selling. Declining for third straight month, annual rate of inflation, based on the consumer prices index (CPI), eased in the month of May at 9.31%, but remained higher than expectation of sub 9% figure. The General Indices for rural, urban and combined are 129.8, 128.4 and 129.2 respectively. Global cues too remained sluggish as European markets opened lower as quantitative easing concerns surfaced again and ahead of the release of Eurozone-wide industrial production data. Back home, sentiments also remained dampened as foreign institutional investors (FIIs) sold shares worth a net Rs 885.85 crore on June 11, 2013. Some pressure also came in from selling in Auto space after Society of Indian Automobile Manufacturers (SIAM) said that the car sales in India fell an annual 12.3% in May. Markets, however, pared almost all of their losses in noon deals as rupee added some respite after strengthening for the first time today during the last five trading sessions. The local currency was trading at 57.98 on the Interbank Foreign Exchange Market at the time of close of Indian equity markets. Yesterday it had closed at 58.39 after touching mark of almost Rs 59 per dollar prompting Reserve Bank of India (RBI) to intervene in the market. But, the recovery was not enough to bring markets back into the green and both the gauges ended the session with a cut of about half a percent. Finally, the BSE Sensex lost 101.87 points or 0.53% to settle at 19,041.13, while the CNX Nifty declined by 28.60 points or 0.49% to end at 5,760.20.