Markets to get some recovery on positive global cues

The Indian markets suffered sharp profit booking in last session and major indices witnessed cut of around a percent on increasing cautiousness of the election results. Today, the start is likely to be in green on supportive global cues and markets may regain some ground. Traders will be getting some support with the Europe India Chamber of Commerce (EICC) latest report stating that there is huge potential to boost the investment flow of European companies, who invested $198 billion in India between 2004 and 2013. There will be some buzz in the infra and aviation stocks on report that after roads and ports, the Finance Ministry is readying a contract which will allow infrastructure debt funds (IDFs) to lend to firms developing airports on public-private-partnership model. Also, as the Malaysia-based AirAsia secured the Directorate General of Civil Aviation (DGCA) air operators’ permit (AOP) a key permit and potentially setting the stage for a fare war with budget carriers. There will be some action in pharma sector too, as to help pharmaceutical exporters numerous manufacturing and inspection requirements being put in place by buyer countries, India is considering joining a group of 41 countries that have good manufacturing practice (GMP) standards for drugs. IT stocks too may see some recovery, after Nasdaq-listed software giant, Cognizant reported a 19.9% rise in its first quarter earnings for the quarter ending March to $2.42 billion. There will be lots of result announcements too, to keep the markets in action. Birla Corp, Finolex Cables, Glenmark Pharma, Jai Corp, NDTV, Sintex Inds, Talwalkar, Union Bank and Zuari Agro will be among the many to announce their numbers today. The US markets made mostly a positive close in last session on easing tension in Ukraine after claims by Russian President Vladimir Putin that all Russian troops deployed along the border with Ukraine have been withdrawn. However, the tech heavy Nasdaq ended lower. The Asian markets have made a green start taking cues from Fed chief Yellen’s remark that a high degree of monetary accommodation remains warranted in light of the considerable degree of slack that remains in labor markets. Back home, Indian markets after two days of mild upmove, succumbed to profit booking on Wednesday and the Nifty slipped to its 6 week low. Though, the start was comparatively good and bourses bucking the negative global cues moved higher, but at the high point of the day profit booking started and gradually took the markets into red, afterwards there was hardly any serious attempt of recovery. Traders apart from the global worries, remained concerned about the growing uncertainty about the election results, as the poll entered the second last eighth phase. The global cues remained sluggish, adding pressure to the movement of the local markets on the lower side; some of the Asian markets suffered sharp cuts after China’s services industry expanded at a slower pace in April and Japanese yen strengthened against dollar. Further the European markets too made a gap down start and weighed on the sentiments of the local markets. Back home, markets that have been trading cautiously for last couple of days witnessed profit booking, and while the volume again remained low, the drag in IT and technology stocks led the markets lower. At one point of time all the IT components of CNX IT were in red with heavyweights like Infosys and HCL Tech, Wipro and Tech Mahindra slumping to multi month low. Earlier, there was some strength in the markets after Reserve Bank of India (RBI) Governor Raghuram Rajan expressed optimism on India’s growth rate going beyond the 5 percent mark soon.  Also, the Paris-based think-tank, Organisation for Economic Cooperation and Development (OECD) in its estimates for 2014 said that India's economic growth is poised to inch up 4.9 percent in 2014 and is expected to gain momentum with a decline in “political uncertainty” after the general elections. However, after the initial gains markets lost their momentum and started slipping with benchmarks losing their psychological levels of 22400 (Sensex) and 6700 (Nifty).In late trade selling aggravated with profit booking in some healthcare stocks despite good set of numbers from Lupin. Finally, the BSE Sensex plunged by 184.52 points or 0.82%, to 22323.90, while the CNX Nifty declined by 62.75 points or 0.93% to 6,652.55.