Wednesday 15 January 2014

Markets to bounce back with a positive start

The Indian markets lost some of their gains in last session as traders opted to book profit ahead of key macro numbers. Today, the start is likely to be in green but the traders will be eyeing the inflation data, slated to be announced later in the day. Wholesale price index-based (WPI) inflation data is likely to cool a bit from a 14-month high of 7.52 percent in November and may strengthen hopes that RBI will maintain a status quo in its upcoming monetary policy review. Traders will be a bit cautious as the India Ratings, a Fitch group company has said that India’s growth rate is expected to slip to 4.9 percent in the current fiscal but will improve significantly to 5.6 percent in 2014-15. There will be some buzz in the oil & gas sector stocks, as the Ministry of Petroleum and Natural Gas, in a bid to attract more global oil majors, has proposed exemption from royalty payment and an income-tax holiday of up to 10 years for the next round of auction of oil and gas exploration blocks. The aviation stocks too will be in action, as the Aviation minister Ajit Singh has said that Cabinet will be giving nod for scrapping the 5/20 rule by next month, which asks Indian carrier must be five-year old and have 20 aircraft in its fleet to fly abroad.

The US markets got a good bounce back following the good monthly retail sales report. Retail sales edged up by 0.2 percent in December. Traders even overlooked the mixed earnings announcements where JP Morgan’s fourth quarter net income that fell year-over-year, while Wells Fargo’s fourth quarter earnings rose by 10 percent. The Asian markets have made mostly a positive start and the Japanese market was leading the pack with gains of over one and half a percent after the yen sank against the dollar.

Back home, Tuesday’s trading session turned out to be a disappointing one for the Indian equity markets, as market participants booked profit after last session’s rally amid weak global cues. Frontline gauges traded in the red throughout the session and settled below their psychological 6,250 (Nifty) and 21,100 (Sensex) levels as investors remained on sidelines ahead of December’s wholesale price index-based inflation data, slated to be released on January 15, 2014. The WPI, India’s benchmark inflation, is expected to edged down to 7.00 percent from a 14-month high of 7.52 percent in November. Global cues too remained sluggish after Atlanta Federal Reserve President Dennis Lockhart said the US economy is on solid footing and he supports similar tapering steps as the one taken to reduce bond-market purchases by $10 billion by the Federal Reserve last month. Selling got intensified in Indian markets after European markets opened in red, Asian markets too ended mostly in the red. Back home, selling was wide based as, barring healthcare and oil and gas, none of sectoral indices on the BSE were spared. Shares of organised retailers declined on reports that the Aam Aadmi Party-headed Delhi government has written to the department of industrial policy and promotion (DIPP) seeking to withdraw its permission to allow FDI in multi-brand retail in the state. Additionally, shares of Aviation counter viz. Spicejet and Jet Air India too edged lower despite report that India’s domestic air traffic grew 3.4 percent in November last year, in spite of significant volatility in the market. However, losses remained capped to some extent with support coming from international credit rating agency Fitch Ratings, saying that Government efforts to achieve the fiscal deficit target of 4.8 percent of the GDP in 2013-14, are supportive for the country’s credit rating. Finally, the BSE Sensex plunged by 101.33 points or 0.48%, to settle at 21032.88, while the CNX Nifty lost 30.90 points or 0.49% to settle at 6,241.85.

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