Friday 24 January 2014

Markets to get a weak start on tepid global cues

The Indian markets though managed a close in green in the last session but the mood remained of consolidation and despite the Sensex closing at record high most of the sectoral gauges ended in negative terrain. Today, the start is likely to remain weak on tepid global cues. There will be buzz in the rate sensitives as the Reserve Bank governor Raghuram Rajan terming inflation as a “destructive disease”, has said that there can be no trade off with growth and prices have to be brought down. Meanwhile, Finance Minister P Chidambaram has said that the Reserve Bank of India (RBI) must retain the objective of supporting economic growth as it battles price rises. He further said that targeting Inflation is only one among the objectives and another objective of the RBI must be to support growth. The PSU banks too may see some action on reports that the government may go in for a second round of capital infusion into public sector banks in February based on their performance on the retail lending front.

Also, there will be lots of important result announcements to keep markets buzzing. Coromandel International, Engineers India, Glenmark Pharma, Karnataka Bank, Maharashtra Seamless, SKS Microfinance and Uco Bank are among many to announce their numbers today.

The US markets ended lower in last session dragged by disappointing Chinese data and as US existing home sales were reported below estimates in December. The Asian markets have made a soft start and some of the indices are lower by around a percent in early deals. Japanese market was leading the losers pack as the yen surged the most since September, while there was concern related to China’s economy after a weak manufacturing data.

Back home, Thursday’s trading session was clearly a day of consolidation as the Indian frontline equity indices appeared a bit fatigued and remained directionless throughout the day. Nevertheless, the benchmarks extended the winning momentum for the fourth consecutive day of trade, as frontline gauges managed to keep their head above water at the end, hitting fresh 2014 closing high. Despite a sluggish opening, markets soon entered into green terrain as some support came with finance minister P Chidambaram’s assured global investors that India is prepared to face the impact of the US Fed tapering and the country is poised to clock 5% growth in 2013-14 and over 6% in 2014-15. Investors also remained optimistic on Moody’s Analytics report that the Indian economy has started to turn the corner and the worst may be over for the Indian economy. It further said that a Narendra Modi-led BJP government, if elected, should offer a more business-friendly policy that will further support confidence and investment. However, gains remained capped as investors were cautious ahead of Reserve Bank of India’s policy review on January 28, 2014. Negative global set-up also added to the pessimistic milieu. All the Asian equity indices, barring Jakarta Composite, ended in the red terrain, while European markets too made a sluggish opening. Back home, sentiments also remained dampened after Indian rupee depreciated against dollar due to month end dollar demand from importers. Metal stocks like Hindalco Industries, Tata Steel, Hindustan Copper etc. edged lower on decline in China’s manufacturing in January. Although, buying which emerged in late trade in jewellary related stocks aided the sentiment to some extent. Scrip like, Titan, Rajesh Exports, Shree Ganesh Jewellery, Gitanjali Gems all edged higher on report that Sonia Gandhi has asked government to lower import duty. Additionally, buying in Capital Goods counter too supported the up-move, led by strong Q3 numbers from Larsen & Toubro. Shares of the company surged nearly 3%, as the company’s margins witnessed expansion during the third quarter ended December post the demerger of its hydro carbon business. Finally, the BSE Sensex gained 35.99 points or 0.17%, to settle at 21373.66, while the CNX Nifty added 6.70 points or 0.11% to settle at 6,345.65.

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