Markets to continue the negative trend with a soft start

The Indian markets after five days of rally showed some profit booking and ended lower in last session. Today, the start of the crucial data heavy day is likely to be soft and the markets will continue to remain under pressure tailing weak global cues. The traders will be concerned with India’s merchandise exports falling for the first time in eight months and set to miss its export target for the fiscal with exports moving into the negative zone in February 2014. Traders will also be eyeing the IIP and Consumer Price Index (CPI) data, which will be released later in the day. While, the IIP is expected to remain subdued, CPI inflation may cool off month-on-month basis. There will be some buzz in the power companies using renewable energy, as the Chairman of Planning Commission Montek Singh Ahluwalia has stressed on lifting of the restrictions on renewable energy. Aviation stocks too will be in action, as the low-cost carriers SpiceJet and IndiGo have kicked off yet another round of price war in the sector.

The US markets continued their consolidation mood, as some traders cashed in on the recent strength in the markets and shrugged off the release of a report from the Commerce Department showing that wholesale inventories rose by more than expected in the month of January. The Asian markets have made mostly a negative start led by the Japanese index which is down by over two percent amid concern that China’s economy may be faltering.

Back home, snapping five days gaining streak, Indian equity benchmarks ended Tuesday’s session in the red with cut of around half a percentage point, as investors opted to book some profit ahead of IIP data for the month of July to be announced on Wednesday, which is likely to extend its contraction of -0.6 per cent in December to -1.10 per cent in January. Traders also awaited consumer price inflation numbers, which is expected to ease at 8.10 per cent in February, as compared to 8.79 per cent registered in the month of January. Indian equity benchmarks failed to extend their initial gains and entered into red terrain after the economy received a sudden jolt, as the country’s merchandise exports declined once again after a span of seven months. Exports came down by 3.67% at $25.68 billion in February compared to $26.66 billion in the same month last year significantly weakening chances of meeting the export target of $325 billion in the present fiscal. Though, trade deficit for February narrowed to $8.13 billion compared to $9.92 billion recorded in January. It was $14.12 billion in the same period last year. Meanwhile, imports were at $33.81 billion compared to $36.49 billion month-on-month. They were down 17% on a y-o-y basis. Oil imports for Feb were at $13.7 billion as against $14.13 y-o-y. Selling got intensified after European markets made a sluggish opening, however, Asian equity indices ended in the green. Back home, sentiments also remained dampened after shares of metal companies remained under pressure for second day in a row after LMEX, a gauge of six metals traded on the London Metal Exchange (LME), hit seven-month low on February 10, 2014, after latest data showed China's exports slumped in February 2014. On the flip side, stock related to power space edged higher after the Appellate Tribunal of Electricity (ATE) asked the Delhi Electricity Regulatory Commission (DERC) and private power distribution companies in the city to lay out a roadmap for liquidation of ‘regulatory assets’ worth up to Rs 8,000 crore. Regulatory assets are non-cash assets that have been put on the books of discoms in cases where the regulator did not raise power tariffs to compensate for higher costs for discoms. Tyre stocks, viz MRF, Ceat, JK Tyre etc too remained on buyers’ radar after rubber prices slipped to multi years low in international market. Finally, the BSE Sensex lost 108.41 points or 0.49%, to settle at 21826.42, while the CNX Nifty was down by 25.35 points or 0.39% to settle at 6,511.90.