Markets to get a cautious start, may recover in latter trade

The Indian markets swayed with the global mood and slumped in the last session, breaking their five days gaining streak, though the geo-political tension was the major trigger but the traders were also disappointed by the weak economic growth of the country on domestic front. Today, the start is likely to remain cautious, but some recovery can be seen in the latter part of trade, as US has warned Russia of serious sanctions. There will be buzz in the markets on reports that the government is considering a proposal to allow companies to issue depository receipts like ADR and GDR against debt instruments, in a bid to deepen financial markets. Besides, the option of giving ADR and GDR holders voting right to make such securities more attractive to foreign investors, too is being considered. The construction and railways related stocks will be in action as the cabinet note on allowing foreign direct investment (FDI) in the railway and construction sectors has been cleared. The Department of Industrial Policy and Promotion had proposed relaxation of FDI norms in the construction sector and 100 percent FDI in the railway sector. The sugar stocks too will keep buzzing, as the Government has notified the incentive for sugar mills to export raw sugar. The rate of incentive will be Rs 3,300 a tonne for February and March.

The US markets suffered sharp cuts in last session on concerns about the latest developments in Ukraine and traders overlooked a report showing that activity in the manufacturing sector expanded at a faster than expected rate in February. The Asian markets have made a mixed start and some of the indices are slowly recovering from their last day’s plunge, though the Chinese market was in red ahead of the National People’s Congress annual meeting starting tomorrow.

Back home, Indian equity benchmarks, snapping five days winning streak, ended the session in the red on the back of sluggish global cues on geo-political tension over Ukraine. Selling was both brutal and wide-based as, barring consumer durables and oil and gas; none of sectoral indices on BSE could manage a green close. Counters, which featured in the list of worst performers, were healthcare, software, power and auto. Sentiments remained down-beat since morning after India’s gross domestic product (GDP) for the third Quarter (October-December) of 2013-14 recorded sub 5% growth for the fifth consecutive quarter, as it came in a shade lower than expectation at 4.7% at Rs 14.8 lakh crore as against  Rs 14.1 lakh crore in the same quarter a  year ago. Sentiments also remained dampened after the output of eight core industries slowed down to a three-month low of 1.6% in the month of January against 2.1% in December on account of poor output of coal, petroleum refinery products and natural gas. The growth of core industries sector in the reported month was much lower than 8.3% growth recorded in the same month last year. Market participants also remained 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. Global cues too remained sluggish with European markets opening with a deep cut of over a percentage point, as investors reacted to a Russian decision to send troops into Ukraine. Asian markets too ended mostly in the red led by the Japanese market that is lower by around two percent. Back home, investors overlooked better factory output numbers. The HSBC Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, rose to 52.5 in the month of February as against 51.4 in January. Sentiments also remained dampened as Indian rupee was trading lower. Global risk aversion on geopolitical tensions in Ukraine is weighing on most Asian currencies. Meanwhile, stocks related to Aviation space declined after the price of jet fuel or aviation turbine fuel was hiked by 1% effective March 1, 2014. On the flip side, stocks of companies associated with the railways edged higher on reports that the government is likely to take up new norms for liberalising the foreign direct investment (FDI) regime in railways. Finally, the BSE Sensex plunged by 173.47 points or 0.82%, to settle at 20946.65, while the CNX Nifty declined by 55.50 points or 0.88% to settle at 6,221.45.