Markets likely to get a flat-to-positive start

The Indian markets declined by around half a percent in last session, mainly tracking the weak global cues after the US Fed’s policy announcement. Today, the start is likely to be flat-to-positive and attempt of recovery can be seen with rebound in the global markets. Amid the election euphoria traders will be reacting to the Moody's Analytics report that has projected the ouster of the UPA government after a disappointing second term, saying that the BJP is likely to form the next government after the general elections. However, there will be some cautiousness too, as the foreign direct investment (FDI) into India grew by a meager 1.5 percent to $ 2.18 billion in January and for the April-January period, foreign investment inflows dipped 2 percent to $ 18.74 billion from $ 19.1 billion during the corresponding period of the previous fiscal. The oil and gas stocks are likely to remain under pressure as the government is yet to notify the new price for domestically produced gas and there might be a delay in the announcement. The banking license hopefuls too are likely to be in somber mood as the RBI is yet to hear from the poll panel.

The US markets shrugging off the interest rate increase concerns moved higher on the back of good economic data. Conference Board showed a bigger than expected increase by its index of leading economic indicators, while there was a modest drop in existing home sales and marginal rebound in initial jobless claims in the week ended March 15th. The Asian markets have made mostly a positive start and barring the slump in Japanese market all the major indices in the region are showing rebound from the biggest loss in last seven months.

Back home, snapping three days gaining streak, Indian equity benchmarks ended Thursday’s trade in the red with a cut of over half a percent and frontline gauges declining below their psychological 6,500 (Nifty) and 21,800 (Sensex) levels on feeble global cues. Sentiments  remained dampened since start of the trade, as US Fed cut monthly purchases of Treasuries to $55 billion and investors remained concerned about the Fed statement that the time between the end of bond-buying and rate increases could be on the order of ‘six months’. Moreover, depreciation in Indian rupee too dampened investors’ sentiments. Indian rupee hit one week low as compared to dollar, reacting to the hawkish stance of the US Federal Reserve Chairwoman Janet Yellen, signaling Fed may raise US interest rates from the middle of next year. Selling got intensified after European markets made a sluggish start, while most of the Asian equity indices ended lower on concern of capital outflows from emerging markets back into the US after the indication of rise in rate. Back home, metal stocks like JSW Steel, Sesa Sterlite, Tata Steel, Hindalco etc all edged lower, as concern deepened that the Chinese economy is slowing. Additionally, public sector oil marketing companies (OMCs) too traded choppy on reports that the finance ministry wants oil marketing companies to absorb a much higher share of under recoveries this fiscal. It was reported that the OMCs will have to absorb as much as Rs 5,000 crore as against Rs 900 crore in FY13. Among stocks that pulled benchmark indices significantly lower were banking and financials. Mortgage lender HDFC and banking stocks such as HDFC Bank, ICICI Bank, SBI and Axis Bank collectively pulled the benchmark lower. However, the losses remained capped as traders continued betting big on the upcoming general election outcome. Some support came from software and technology counters which gained around a percentage point with the industry body Nasscom admitting that the domestic story has not been good in the country and saying that though US market is looking up, the industry should open up new fronts such as China, Japan, South Korea and Africa. Finally, the BSE Sensex declined by 92.77 points or 0.42%, to settle at 21740.09, while the CNX Nifty lost 40.95 points or 0.63% to settle at 6,483.10.