Markets to get a cautious start; Rail budget eyed

US markets slumped, while most of the Asian markets have made a soft start

The Indian markets barely managed a positive close in the last session, some panic selling in broader markets spooked overall market sentiments, though the bluechip stocks held their bastion and supported the markets to recover in the final hours. Today, the start is likely to remain cautious as the traders will be eyeing the debut Rail Budget of Pawan Kumar Bansal, on whether he yields to pressure of hiking passenger fares yet again or looks at other measures to mobilise resources to offset the burden of the recent diesel price hike. There is expectation of slew of passenger-friendly measures such as improvement in catering service, maintaining cleanliness at rail premises and development of stations. 

Railways stock like, Kernex Microsystems, Zicom Electronic, Titagarh Wagons, Kalindee Rail, Bartronics India and BEML that have been suffering since last couple of days, will see some action based on the announcements made in the Rail Budget. The other sector that is likely to be in spotlight today is telecom sector, as on the last day of the second round of spectrum auction, nobody applied for GSM waves, Russian conglomerate Sistema Shyam was the sole applicant for the 800 Mhz band spectrum used by CDMA operators and that too in just one of the three bands offered for sale.Though, traders are likely to get some strength as global ratings agency Standard & Poor's has said that it sees economic growth improving to 6.4 per cent next fiscal.

The US markets tumbled with the start of new week, though the indices got a positive start but uncertainty about the outcome of elections in Italy led the sharp selling in the markets. The Asian markets have made a mixed start with majority of them trading in red on concern that European debt crisis may come to the forefront again, with the election outcome of Italy. The Japanese market was suffering a cut of over a percent as the companies that do business in Europe dropped.

Back home, key domestic benchmarks witnessed another day of consolidation with both the frontline indices managed to keep their head above water on Monday. However, market participants stayed away from piling positions in risky assets ahead of Railway and Union Budget. The local gauges pulled back after breaching 19,250 (Sensex) mark as investors continued taking positions in software and technology stocks led by rally in Infosys, TCS and HCL Tech. Sentiments also got some support as select non-banking finance companies (NBFC) shares like Mahindra & Mahindra Financial Services, L&T Finance Holdings, Bajaj Finserv, Bajaj Finance and Reliance Capital all edged higher in early morning deals after the Reserve Bank of India (RBI) issued guidelines for the new bank licences, which will pave the way for both corporate entities and NBFC to begin banking operations.

 The most important thing is that RBI has not excluded companies or entities from any specific industry from applying for a new bank licence. In other development, the government has exempted merger and takeover plans for loss-making and failing banks from the purview of fair trade regulator Competition Commission for a period of five years. Markets, in the early noon trade, witnessed a sudden slide as shares of Core Education, Eros International, ABG Shipyard, Orbit Corporation, Welsupn Corp, Opto Circuits etc were beaten down badly as brokerages offloaded shares in these counters on the back of margin call triggers by HNIs and retail investors. 

Highly leveraged HNIs and investors faced the brunt as lack of market support and participation led to bigger than expected fall in frontline midcap stocks. However, the frontline gauges made a remarkable recovery in mid-noon trade supported by firm opening in European markets ahead of the end of voting in a closely-fought election in Italy, seen as crucial to efforts to dig the euro zone out of crisis. Back home, some support also came in from buying in cement stocks which rose on expectations that the government will provide a thrust on infrastructure development in Union Budget 2013-14 to be tabled in the Parliament on February 28, 2013. 

However, gains remain capped as shares of companies whose fortunes are linked to orders from Indian Railways like Kernex Microsystems (India), Titagarh Wagons, Kalindee Rail Nirman (Engineers), Hind Rectifiers, Zicom Electronic Security Systems and Stone India edged lower ahead of Railway Budget to be released on February 26, 2013. Finally, the BSE Sensex gained 14.68 points or 0.08% to settle at 19,331.69, while the CNX Nifty rose by 4.45 points or 0.08% to end at 5,854.75.