Markets to get a cautious but positive start; likely to see recovery in latter half

The Indian markets went through a disastrous last week and continued declining till last day. Today, the start is likely to be cautious but positive and some pullback can be expected with likely buying at lower levels. Traders will be taking support with a FICCI survey that India’s manufacturing sector is likely to witness a “slight upturn” in the second quarter on the back of government’s efforts to remove bottlenecks by clearing large projects and a better export outlook. Though, all eyes will be on rupee movement too, after it reached its all time closing high in last session despite RBI’s several liquidity-tightening measures to defend the currency. Meanwhile, the Finance Ministry is likely to finalise Rs 14,000-crore capital infusion for public sector banks by the end of this month to meet their global capital requirement norms, Basel III. There will be buzz in the pharma sector, as Finance Ministry plans to approach the Department of Industrial Policy and Promotion (DIPP) for ‘finer classification’ of products in the pharmaceutical sector for foreign direct investment norms. 

There will be lots of important result announcements too, to keep the markets buzzing. Aptech, Astral Poly, EIH, Engineers India, IL&FS Engg and Const, Jindal Photo, Radico Khaitan, RCF, Spicejet, Tata Chemicals and Wheels India are among the many to announce their numbers today.

The US markets ended modestly higher in last session on getting good jobs data, though the numbers were below the forecast but traders took heart with report of consumer spending acceleration while inflation’s slowdown too was arrested. The Asian markets have made a mixed start, led by the Japanese market that has lost over a percent in early trade, as yen traded near its strongest close in a month.    

Back home, Indian benchmarks seems to be trapped in bears grip with frontline gauges once again ending the session in the red, prolonging their southward journey for eighth straight session. Both the benchmark indices tumbled below their crucial 5,700 (Nifty) and 19,200 (Sensex) levels as selling pressure was witnessed in rate-sensitive shares after investors turned uncertain as to when the central bank will rollback its short-term rate hike aimed to curb rupee’s fall. Though, the domestic bourses made a gap-up opening as sentiments remained firm after Indian government further relaxed foreign direct investment norms in the retail sector to attract overseas investments with the Cabinet headed by Prime Minister Manmohan Singh diluting the mandatory 30 percent local sourcing norms for multi-brand retailers and permitted states to include cities with population less than 1 million for allowing multi-brand retailing.  However, after the initial one hour of trade markets started moving southward and never looked in recovery mood till end, as investors turned cautious on Reserve Bank of India (RBI) governor D Subbarao’s statement that maintaining a stable exchange rate is important for growth, last day the central bank has further tightened norms of hedging for foreign institutional investors. Sentiments got clobbered out of shape after the rupee fell on higher demand for the US currency from importers, even as RBI took more measures to curb the domestic unit’s fall. Investors also shrugged off firm global cues with most of the European counters trading in green in early deals, ahead of the release of the key monthly US jobs report. Back home, selling in public sector oil marketing companies too dampened the sentiments. Stocks of BPCL, HPCL and IOC tumbled as higher crude oil prices and weakness in rupee raised concerns about increased costs of importing oil. Meanwhile, Financial Tech extended the losses and dropped by over 20%. National Spot Exchange (NSEL), a group firm, suspended trading in all contracts except ‘e-series’ until further notice, shares of Financial Technologies (FT) and Multi-Commodity Exchange (MCX) on Thursday had tanked on the BSE and continued the same trend on Friday. Finally, the BSE Sensex lost 153.17 points or 0.79% to settle at 19,164.02, while the CNX Nifty declined by 49.95 points or 0.87% to end at 5,677.90.