Markets to make a cautious start on sluggish global cues

Indian markets took a breather in last session, though the markets finally managed a green close after a choppy trade. Today, the start is likely to remain cautious tailing weakness in the global markets. Traders will be paying attention to Reserve Bank of India Governor Raghuram Rajan’s statement that it is essential for India to achieve sustainable economic growth. He has said that containing fiscal deficit is essential for achieving sustainable growth and underlined the need for developing a "good system" to deal with bad loans in banking sector. However, there is some positive news as well, National Council of Applied Economic Research (NCAER) in its latest release has said that the business confidence in last quarter of 2013-14 improved further on expectations of a new electoral mandate that influenced the overall sentiments. The BCI in March quarter rose by about 3.8 per cent from the previous quarter to 127 points. Also after Moody’s, another global credit ratings agency Fitch Ratings has said that the clear electoral mandate given to the Narendra Modi-led BJP has reduced political uncertainty and improved the prospects for economic policy reform. There will be some buzz in the PSU oil marketing companies, on reports that Modi government may push ahead with diesel price deregulation and raise natural gas rates. There will be some important result announcements too, to keep the markets buzzing. Dhampur Sugars, JK Paper, Mahindra Ugine, NIIT, Morepen Lab, T D Power Systems, Texmaco Infra and UCO bank will be among many to announce their numbers. The US markets suffered sharp plunge in last session on possibility of early rate hike after Philadelphia Federal Reserve President said that the Fed may be required to begin raising interest rates sooner rather than later as inflation moves closer to the 2 percent target. Sentiments also remained weighed down by disappointing quarterly results from retailers. The Asian markets have mostly made a soft start led by the Japanese market, ahead of a Bank of Japan decision on monetary policy today. Back home, key domestic benchmarks managed to keep their head slightly above water on Tuesday, extending gaining streak for the fourth straight day. The bourses went through volatility where frontline gauges, after making a gap-up opening, slipped into red and alternately moved between positive and negative zone for most part of the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to eke out slender gains, as rally in software and index heavyweight shares like ITC and HDFC helped offset losses in oil shares. Earlier, after a positive opening buying momentum picked up pace on sustained foreign funds inflows after credit rating agency Moody’s said the BJP-led NDA’s victory in polls is credit positive for India, as a stable central government is expected to address economic woes. Sentiments also remained up-beat on report that foreign institutional investors (FIIs) bought shares worth a net Rs 1350.04 crore on May 19, 2014, as per provisional data from the stock exchanges. However, reversing the early trend frontline gauges entered into red terrain in afternoon trade largely on emergence of profit-booking in recent gainers. However, reversal of trend was witnessed amid profit booking at higher levels after last three consecutive sessions’ of bull-run. Sluggish opening in European counters too dampened the sentiments. Back home, the software exporters firmed up on bargain hunting activities after previous sessions’ drubbing. Moreover, shares of real estate and infrastructure companies rallied on the back of heavy volumes on expectations of change in policy environment. Unity Infrasprojects, Lanco Infratech, IL&FS Engineering and Constructions, Unitech, Oberoi Realty, Housing Development and Infrastructure (HDIL), Ansal Properties, Man Infraconstructions and Kolte Patil Developers rallied more than 10% each on the Bombay Stock Exchange (BSE). Additionally, stocks related to consumer durables sector remained on the buyers’ radar on hopes of an uptick in demand with the BJP-led NDA government promising to unveil reforms to boost economic growth. Finally, the BSE Sensex added 13.83 points or 0.06%, to 24376.88, while the CNX Nifty was up by 11.95 points or 0.16% to 7,275.50.