Markets to see some recovery after last session’s plunge

The Indian markets suffered sharp plunge in last session tailing the weakness in the global markets on concern of domestic economic conditions with mixed set of macro data. Today, the start is likely to be mildly positive and some recovery can be expected after last session’s plunge. Though, there will be some cautiousness too, as a United Nations report has said that the government is unlikely to meet fiscal deficit target of 4.8 per cent of the GDP in the current fiscal due to low growth and high subsidy. Also, a Finance Ministry document has said that High inflation poses a big threat to growth, as it would impair the ability of the Reserve Bank to cut interest rates to boost economic activities. However, there is good news for the government from the telecom front, as the 2G spectrum auction raised Rs 61,162 crore after 10 days of fierce bidding, which has ensured a minimum revenue of Rs 18,296.36 crore to the government in the current financial year ending March 31. Though, the telecom companies are likely to come under pressure on concern of rising debt levels, as the total bid amount fell just short of the amount bid for 3G airwaves in 2010.

Today is the official closing day of the 3rd quarter earnings season, so there will be lots of result announcements to keep the markets buzzing. ABG Shipyard, BAG Films, Bajaj Hindusthan, Bannari Amman Sugar, Bharati Shipyard, CRISIL, Dishman Pharma, DLF, Financial Tech, Gitanjali Gems, HDIL and M&M are among many to announce their numbers.

The US markets recovering from their initial weakness posted good gains in the last session. Traders shrugged off a pair of disappointing economic reports as weather-related and were encouraged by the report showing a slightly bigger than expected increase in business inventories in December. Most of the Asian markets have made a green start with some of the indices heading for their biggest weekly advance since September, while some are marginally in red. Chinese consumer prices rose faster than estimated in January.

Back home, Indian markets followed the global market trends on Thursday and gave up more than what they have garnered in the last 6-7 sessions. Apart from the negative global setup, disappointing macro data from the domestic economy front too weighed on the sentiments. Also, there were some earnings disappointment that took their toll on the traders sentiment. Markets kept on declining right from the beginning and stopped only with the closing of the trade, at the lowest point of the day and benchmarks lost their crucial support levels, while Nifty intraday breached 6000 level and barely managed to hold it in last. The global cues remained weak, while the US markets ended mostly in red, the Asian markets made a soft close. The European markets too made a soft start and pressured the domestic markets. Back home, the local markets made a positive start but soon relinquished gains, as the euphoria of the retail inflation slowing down to a two-year low in January to 8.79 percent fizzled out and the traders turned cautious with the rise in core retail inflation to 8.11% from 8.08% in the previous month, that raised concerns that RBI in its upcoming policy review on April 1, 2014 may go for another rate hike, as it has deemed the core inflation above 8% uncomfortably high. Traders also remained concerned about the third straight month of contraction in industrial production by 0.6 per cent in December 2013, presenting a gloomy picture of the industrial scenario in the country. The weakness in rupee too pressured the markets mid way, the domestic currency after a good start faltered on fresh dollar demand from banks and importers. Barring modest gains in the realty index, none of the sectoral indices showed any resilience and most of them ended lower by over a percent, with banking and capital goods suffering the maximum beating. One spot that remained in green since morning was sugar sector after the Cabinet Committee on Economic Affairs (CCEA) finally approved a subsidy of Rs 3,333 per tonne for exports of raw sugar. There was weakness in some heavyweights that dragged the markets lower; Cipla plunged around 8% after reporting over 16% fall in its net profit at Rs 284.31 crore for the quarter ended December 31, 2013, as compared to Rs 340.31 crore for the same quarter in the previous year. Coal India was down by over 3% on reporting below expectations numbers. ONGC too slumped by around 4% after the Supreme Court put a stay on Gujarat High Court order asking it to pay Rs 10,000 crore in past royalty dues. Finally, the BSE Sensex plunged by 255.14 points or 1.25%, to settle at 20,193.35, while the CNX Nifty lost 82.90 points or 1.36% to settle at 6,001.10.