Friday 17 January 2014

Markets to get a cautious start on sluggish global cues

The Indian markets consolidated in last session and ended modestly in red overlooking the good global cues, though good set of earnings restricted the markets from any big fall. Today, the start is likely to be cautious and markets may turn lower tailing weakness in global markets. Traders will be first reacting to the TCS earnings, announced late evening. The company has reported 50.3% jump in third-quarter profit and signaled a stronger year ahead, the whole IT sector is likely to see some positive move with the numbers. There will be some cautiousness in the markets, as the Global ratings agency Moody’s has said that India’s economic recovery is likely to be slow in the second half of 2014, but the outcome of general elections could have an impact on the growth prospects. Sugar stocks may see some recovery with an informal group of ministers (GoM), headed by Agriculture Minister Sharad Pawar, approving incentives to the beleaguered sugar industry for exports of up to 40 lakh tonnes of raw sugar for two years. Fertilisers’ stocks will keep buzzing, as the Fertiliser Ministry has sought an additional subsidy of Rs 20,000 crore from finance ministry for the industry.

There will be lots of important result announcements too, to keep the markets ticking. Federal Bank, HDFC Bank, Hindustan Zinc, ITC, NIIT, PTC India, RIL, TTK Prestige and Wipro are among many to announce their numbers.

The US markets returned to the somber mood and ended mostly lower on getting a mixed batch of economic data. There was stronger than expected regional manufacturing growth but an unexpected pullback in homebuilder confidence. The Asian markets have made a soft start and some of the indices are trading lower by over half a percent and traders were eyeing important Chinese economic data due next week.

Back home, thursday turned out to be a lackluster session for the Indian benchmark indices as frontline gauges traded in an extremely tight range hardly budging from the psychological 6,300 (Nifty) and 21,250 (Sensex) levels. Markets witnessed consolidation during the day’s trade as investors booked some profit garnered in previous session. Nevertheless, benchmarks made positive start as sentiments remained up-beat after the World Bank in its latest report highlighted that India’s economy is expected to grow by 6.2% in 2014 and 7.1 percent by 2016-17 as global demand recovers and domestic investment increases. Some support came in from Finance minister P Chidambaram expressing confidence of India getting on the high growth path in the next three years and attributing the decline in growth rate to global factors. Global cues too remained choppy with European equities edging lower in early deals after climbing to a 5-1/2-year high in the previous session, moreover, Asian equity counter retreated from their high level and ended mixed. Back home, sentiments also remained dampened after telecom stocks tumbled, as the surprise decision of Reliance Industries (RIL) to join the bidding for upcoming telecom spectrum auction slated for February 3, 2014 raised concerns of aggressive bidding in the auction which in turn could have an adverse impact on balance sheet of telecom firms. Moreover, stocks related to sugar space too remained under selling pressure despite an informal group of ministers (GoM), headed by Agriculture Minister Sharad Pawar, approving incentives to the industry for exports of up to 40 lakh tonnes of raw sugar for two years. However, the down-side remained capped on reports that government officials have indicated that the fiscal deficit will be below 4.8 per cent of GDP and it may come down to 4.65%. Some support also came in after rating agency Moody’s said that India's sovereign downgrade is not on the cards. Finally, the BSE Sensex declined by 24.31 points or 0.11%, to settle at 21265.18, while the CNX Nifty lost 2.00 points or 0.03% to settle at 6,318.90.

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