Markets to continue their weak trend on soft global cues

The Indian markets after a volatile trade extended their losing streak in last session on sluggish global cues, traders remained concerned with the weak Services PMI data. Today, the start is likely to remain in red with major averages extending their losing streak. Traders will also be concerned with a private report stating that government must focus on structural reforms to put the country on the path of faster economic growth, as the 'several reforms' implemented so far may not be enough in a fast-changing world. Meanwhile, President Pranab Mukherjee has said that falling exports is an area of concern despite a healthy current account situation, as it impacts economic performance, industrial growth and employment opportunities. There will be some buzz in the aviation sector stocks, on some reports that the civil aviation policy is likely to come before the Cabinet next week and it may retain the proposal of auctioning unused bilateral rights. There will be some action in telecom stocks too, as the Telecom Minister Ravi Shankar Prasad has said that the number of Internet users in the country is likely to reach 500 million this year from around 400 million Internet users.

There will be some important result announcements too, to keep the markets in action. Castrol India, Hero MotoCorp, Eicher Motors, GE Shipping, IIFL, MCX, Indian Bank, Godrej Properties etc will; announce their numbers.

The US markets ended lower for the second day in a row in last session, with the tech-heavy Nasdaq ending the session at its lowest closing level in almost two months. There were some disappointing economic data, with a report from payroll processor ADP showing weaker than expected private sector job growth that weighed on the sentiments. The Asian markets have made mostly a weaker start with some indices witnessing cut of about half a percent after the report that growth in China’s services output moderated in April.

Back home, Wednesday’s session saw Indian benchmark indices complete a hat-trick of disappointing performances, reaching the finishing with cut of over half a percent.  Disappointing manufacturing surveys from China and the UK, combined with downgrades to growth and inflation forecasts from the European Commission soured investors' mood.  On the domestic front, sentiments were undermined after private sector activity in the country eased in April amid slower expansion in new business inflows in services sector, while order books at manufacturers also broadly stagnated. The Nikkei India Composite PMI Output Index, which maps both manufacturing and services sectors, dropped from 54.3 in March (37-month high) to 52.8 in April, pointing to a softer expansion in private sector activity across the country. Further, a softer expansion in activity suggests that companies are not fully convinced about the recovery. Besides, persistent selling by foreign funds, depreciation of rupee value against the dollar and extended losses in crude oil prices further dented sentiments. Indian rupee weakened 22 paise to 66.64 against the US dollar at the time of equity markets closing on increased demand for the American currency from importers and banks. Some losses were restricted with the Science and Technology Minister Harsh Vardhan’s statement that the Monsoon is expected to hit Kerala by May-end or early June, with various forecasting agencies predicting normal or above normal rainfall this year. Furthermore, the International Monetary Fund retained its growth forecast for India this year at 7.5 per cent, largely driven by private consumption even as weak exports and sluggish credit growth weigh on the economy. Meanwhile, sharp selling was witnessed in metal and mining stocks, as copper prices declined in global commodities markets. Telecom stocks declined after the telecom companies told the Supreme Court that the entire sector is under huge debt and they have to pay a big price for spectrum. Finally, the BSE Sensex declined by 127.97 points or 0.51% to 25101.73, while the CNX Nifty dropped 46.15 points or 0.60% to 7,700.85.