Markets to make a cautious start a day ahead of the big event

The Indian market took a pause in last session and the major indices ended flat after four straight days of gains, there was some cautiousness and profit taking in selective counters that restricted the markets from moving higher. Today, the start is likely to remain soft-to-cautious tailing weak global cues and the traders may prefer to remain on sidelines going for a big event next day, when amid all the speculations the counting of votes will be done to arrive at the final tally of the general elections. Markets seem to have more or less priced in the exit poll prediction of a majority for the BJP-led National Democratic Alliance (NDA) in the Lok Sabha. The banking stocks are likely to remain in limelight after the RBI panel had recommended a one-licence policy for all banks, irrespective of the ownership pattern. The coal and power stocks too may see some upmove as the Centre has announced a nine-member panel, which will identify more blocks, in addition to already selected 54 mines, for sale through competitive bidding to expedite coal auction process. There will be some buzz in the IT sector too, as the industry body Nasscom has prepared a five-point agenda for the new Indian Government to help its IT companies contribute in the development agenda within the country and to enable them in increasing their global footprint. There will be some scrip specific actions based on the rebalancing of MSCI index. Also, there will be lots of important result announcements. Adani Ports, Adani Power, Alok Inds, Apollo Tyres, Arvind, Bajaj Auto, Bajaj Holdings, Bank of India, EID Parry, Elder Health, Goodyear India, Essar Ports, Gujarat Gas, J&K Bank, Manappuram Finance, NTPC, Tata Teleservices and Videocon Inds are among many to announce their numbers today. The US markets ended considerably lower as selling picked up after the troubling inflation data, however it was mainly profit taking that dragged the major averages firmly into negative territory. The Asian markets have made mostly a lower start and some of the indices are down from a four-month high. The Japanese market was leading the losers pack as the yen touched the strongest level in almost a week and ahead of the speech of Bank of Japan’s Governor Haruhiko Kuroda. Back home, snapping four days gaining streak, Indian equity benchmarks witnessed consolidation on Wednesday with nifty closing absolutely flat, while Sensex ended in the red with a cut of around quarter a percent as investors opted to book profit ahead of final results of elections on May 16. A bout of volatility was witnessed during the session with key benchmark indices slipping into the red after opening in green. Sentiment remained down beat with Organisation for Economic Cooperation and Development (OECD) saying that India, China and other major emerging economies are expected to see weak growth even as momentum remains stable in the developed world. Investors’ sentiment also remained subdued as Consumer price inflation (CPI) numbers released on Monday showed that retail inflation rose from 8.3 per cent in March 2014 to 8.6 per cent in April 2014. Sluggish opening in European counters too dampened the sentiments. Though, the Asian markets shut shop mostly in the green but Chinese market ended marginally in red after country’s central bank called on the biggest lenders to accelerate the granting of mortgages. Back home, selling in healthcare counters too dampened the sentiments, led by over three and a half percent fall in Dr Reddy’s Laboratories after reporting a lower than 15.6% year on year (yoy) drop in consolidated net profit at Rs 482 crore for the quarter ended March 31, 2014 (Q4FY14), mainly due to higher operating expenses. Meanwhile, shares of public sector oil marketing companies like BPCL, HPCL and IOC edged lower after oil prices extended gains in Asian trade. On the flip side, shares related to public sector undertakings (PSU) banks viz. Bank of India, Punjab National Bank, Canara Bank, Union Bank of India, Andhra Bank, Allahabad Bank, State Bank of India, Bank of Baroda etc. edged higher after a committee appointed by the Reserve Bank of India (RBI) made some radical suggestions regarding the government’s control over nationalised banks. Moreover, shares of infrastructure and real estate companies remained on buyers’ radar amid expectations that a new government at the centre would give the much-needed thrust to economy recovery. Finally, the BSE Sensex declined by 56.11 points or 0.24%, to 23,815.12, while the CNX Nifty ended unchanged at 7,108.75.