Markets to make a soft start tailing weak global cues

The Indian markets after a range bound trade, witnessed some last minute spurt that took the indices higher for yet another day, and benchmarks ended higher by around half a percent in last session. Today, the start is likely to be a bit subdued tracking the weakness in the global markets. Traders will also be concerned about the report on FDI investments, as India received $ 1.1 billion of foreign direct investment in December 2013, unchanged from the level in the same month a year earlier. However, for the April-December period, foreign investment inflows dipped 2 percent to $16.56 billion from $ 16.94 billion during the corresponding period of the previous year. Meanwhile, an Inter Ministerial Group (IMG) headed by Department of Industrial Policy and Promotion (DIPP) Secretary Saurabh Chandra, will hold its first meeting to further simplify the language or structure in the text of the consolidated FDI policy. There will be some buzz in the aviation stocks, as the DGCA has mandated that no domestic scheduled passenger airline will enter into an agreement with foreign airlines or foreign investors which gives these foreign entities or others the right to control the management of the domestic operator on their behalf. There will be some buzz in the banking stocks too, as the Indian banks operating overseas have witnessed higher credit growth compared to their foreign counterparts operating in India.

The US markets ended lower in last session, weighed down by the release of minutes from Federal Reserve’s recent meeting where members agreed for further reduction in the pace of asset purchases. The Asian markets have made a weak start and barring Shanghai all the major indices are in red led by the Japanese market, as the nation’s trade deficit widened to a record in January. Chinese market was up despite a private survey showing a faster-than-estimated drop in manufacturing.

Back home, Indian markets witnessed a breakout from their consolidation mood on Wednesday to end near the high points of the day, extending gains for the fourth straight session. Though, the trade remained range bound for most part of the day and bourses seemed struggling to move higher, also there were rounds of volatility too, with sometimes the benchmarks seemed very close to entering the red on profit booking in the sectors that had performed well in last couple of sessions. However, the mood on the street remained cautious and traders largely preferred to remain on sidelines ahead of the US Fed’s release of minutes from its last policy meeting later in the day, which will provide a detailed look at what members of the central bank's policy committee were discussing when they issued their last directive. The overall global cues remained mixed; the Asian peers snapped the session mostly in green, while the European markets turned negative soon after the beginning. Back home, the markets gained some traction in the last leg of trade, once again supported by the spurt in the banking stocks, while other laggards of the day, barring metal too added strength. However, the trade remained dull for most part of the day and traders kept considering only value buying. Some support to the market also came with sustained capital inflows from foreign funds. The foreign institutional investors bought shares worth Rs 292.23 crore, while domestic institutional investors were net sellers worth Rs 154.83 crore on Tuesday. Sectorally, while the IT, Tech, Consumer Durables and Capital Goods led the market gains, Metal and Power suffered profit booking. There was some buzz in the telecom stocks, as the telecom secretary announced that the much-awaited guidelines for mergers and acquisitions of telecom companies will be in place within 10 days. The healthcare or Pharma index showed good upmove supported by surge in Ranbaxy on reports that New York Attorney General Eric Schneiderman will announce a settlement with US units of Ranbaxy Laboratories and Teva Pharmaceutical Industries over allegations the two rival generic drug makers made an unlawful agreement to restrict competition. The non sectoral gauge of sugar was in jubilant mood on Indian Sugar Mills Association (ISMA) report that the country’s sugar output fell over 13 per cent to 14.4 million tonnes so far this year on delayed crushing, compared to 16.6 million tonnes of sugar in the corresponding period of the 2012-13. Finally, the BSE Sensex gained 88.76 points or 0.43%, to settle at 20,722.97, while the CNX Nifty added 25.65 points or 0.42% to settle at 6,152.75.