Markets to make a cautious start on geo-political worries

The Indian markets continued their uptrend in last session and ended higher by over half a percent making February a month of good gains. Today, the start of the new week is likely to be a bit cautious tailing the sluggish global cues on geo-political tension. On the economy front market men will be reacting negatively to the GDP numbers for the third quarter, which coming at 4.7 percent has remained sub 5 percent for the fifth consecutive quarter. Traders will also be concerned about a survey by industry body CII and ASCON findings that industrial activity in the October-December 2013 quarter remained subdued and grim, treading along the growth path of the previous quarter. There will also be some cautiousness with early forecasts by leading global climate models suggesting that India may possibly see below-normal rainfall during June-August. However, there will be some cheer too, with the government extending export duty benefits to certain labour intensive sectors including textiles and leather. Directorate General of Foreign Trade (DGFT) in his notification has said that export of products of high labour intensity and employment potential would be eligible to avail incentives “at the rate of 2 percent of free-on-board value of exports.”

The US markets ended mostly in green in last session, though the economic news remained mixed amid concern of tension between Russia and Ukraine. The Asian markets have made a soft start led by the Japanese market that is lower by around two percent in early deals, as investors reacted to a Russian decision to send troops into Ukraine.

Back home, first day of new F&O series turned out to be steady session of trade for Indian equity markets, which gradually gaining ground concluded not only near day’s high point, but also at five-week highs. Frontline gauges, extending their gains for fifth straight session, recaptured their crucial 21,100 (Sensex) and 6,250 (Nifty) ahead of GDP figures for the December 2013 quarter slated to be released later in the day. The consensus estimates of GDP growth for the December quarter is around 4.7 per cent. Some support also came on report that foreign institutional investors (FIIs) bought shares worth net Rs 511.15 crore on February 26, 2014, as per provisional data from the stock exchanges. Supportive cues from US markets too provided support to local markets; positive closing in Asian markets too boosted the sentiments across globe, while the European shares too edged higher in early deals. Back home, markets extended their northward journey in late trade as rate sensitive counters like Banking, Realty and Auto all edged higher as the Reserve Bank of India (RBI) governor Raghuram Rajan has hinted that rates are likely to remain unchanged in the forthcoming monetary policy in April 2014. Some support also came after Fertilizer stocks rallied after Cabinet Committee on Economic Affairs cleared the hike in fixed cost of urea by up to Rs 350 per tonne, a move that would lead to increase in subsidy by about Rs 900 crore. It also approved changes to the policy that aims at encouraging new investment in the urea sector by removing ‘guaranteed buyback’ clause and including a provision of bank guarantee of Rs 300 crore from companies. The up-move was also supported by rally in technology and software counters as rupee depreciated on month-end dollar demand. Additionally, shares related to Pharma space too remained on investors’ radar fuelled by better-than-expected financial results for the quarter ended December 2013, driven by higher revenue growth and margins in key markets. Finally, the BSE Sensex surged by 133.13 points or 0.63%, to settle at 21120.12, while the CNX Nifty gained 38.15 points or 0.61% to settle at 6,276.95.