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.

Opening Bell :-Markets to get a cautious start; inflation data to give direction

The US markets ended mixed, while the Asian markets have made a positive start

The Indian markets lost their steam in the final hours and the major indices barely managed to end in green despite a good trading throughout the day, while the broader indices remained under pressure till last. Today, the start is again likely to be cautious but positive, ahead of the WPI inflation numbers scheduled to be announced later in the day. There is wide expectation that the inflation figures cooled down to around 7% in January from its last month’s reading of 7.18%. 

Though, Reserve Bank of India (RBI) has warned that the inflation still remains above its acceptable levels but a slowing trend may prompt it to opt a more lenient view. Today, the export oriented sectors will remain in upbeat mood after India's exports rose for the first time in nine months in January, albeit marginally. While, the trade deficit has now widened to nearly $20 billion from $16.7 billion a year ago. The PSU oil marketing companies too may remain buzzing on plan to raise petrol price by Rs 1 per litre and diesel by 50 paise a litre if they get the informal nod of oil minister Veerappa Moily.

There will be some big result announcements too during the day. Aditya Birla Nuvo, Austral Coke, CRISIL, Dr Reddys Lab, Elder Pharma, Gail India, HCL Infosystems, HDIL and SBI will be among many to announce their numbers today.

Markets likely to make a flat start; to get direction with political developments

The US markets ended flat, while the Asian markets have started mostly in green

The Indian markets failed to capitalize on their early leads and snapped another day consolidating in last session. While, the robust IIP numbers gave a sense of relief, the higher CPI numbers overshadowed the enthusiasm. Today, the start of the markets is likely to remain flat-to-cautious, traders will be eyeing the development in Parliament, as Finance Minister P Chidambaram has expressed hope that opposition would cooperate in getting five key economic reforms bills passed in the ongoing winter session of Parliament. Earlier the government has announced a judicial probe into reports of lobbying by supermarket chain Walmart. The PSU sectors are likely to remain in upbeat mood, as the government witnessed strong participation from foreign investors and managed to mop up Rs 6,000 crore from the sale of its 10% stake in the iron ore miner NMDC. There will be buzz in the NBFCs too, as RBI has issued new prudential norms which require NBFCs to have a tier-one capital adequacy ratio (CAR) of 12% by April 2014. At present, the tier-I requirement is 7.5% for NBFCs except those in infrastructure where it is 10% and for those lending against gold where it is already 12%.

The US markets made a mixed closing, losing most of their early gains as House of Representatives Speaker John Boehner said that serious differences still remain in talks to avert the steep tax hikes, offsetting early leads of Fed announcement to the latest extension of its bond-purchasing program and low-interest rate policy. The Asian markets have started mostly in green, though few of the indices are marginally in red but others have taken encouragement with advancement in Japanese Exporters after yen fell to an eight months low.

Back home, mood of consolidation extended to the eighth straight day for the Indian markets. Frontline indices, despite some early leads on Wednesday, failed to capitalize and ended the session slightly in the red, as better-than-expected Index of Industrial Production (IIP) data for the month of October dashed expectations of rate cut from the Reserve Bank of India (RBI) in its upcoming policy meet on December 18, 2012. Industrial production growth rate bounced back to a 16-month high of 8.2% in October on good performance of the manufacturing, power sector and higher output of capital as well as consumer goods, indicating sudden recovery in the economy. The factory output, as measured by the Index of Industrial Production (IIP), contracted by 5% in October last year. The IIP had expanded by 9.5% in June 2011. Higher consumer price inflation (CPI) too dampened the investors’ sentiments as likely hood of a rate cut in forthcoming mid-quarter monetary policy review got lower. November 2012 CPI inflation number showed that the retail inflation is again trending towards double digit to 9.90 per cent in November 2012 as compared to 9.75 per cent in October 2012. Now all eyes would be on the wholesale price index (WPI) for November 2012, which is due on December 14, 2012. Some amount of selling was also witnessed after banking space took U-turn as both Houses of Parliament were adjourned before taking up the Banking Amendment Bill. The Banking Amendment Bill entails easing voting rules of shareholders in banks to attract foreign investment and allows the central bank more powers. However, global cues remained firm and helped the domestic markets to limit their losses as all the Asian equity indices ended the session in the green. Back home, stocks from Capital Goods, Public Sector Undertaking (PSU) and Metal counters witnessing nasty laceration, went home with loss of over half a percent. Downfall was also supported by fall in shares of three public sector oil marketing companies, as the government is considering raising the cap on the number of subsidised LPG cylinders available to households to nine per year. However, the losses remained capped as Software pack showed some traction amid sustained optimism for an agreement on upcoming US tax hikes. Finally, the BSE Sensex lost 31.88 points or 0.16% to settle at 19355.26, while the S&P CNX Nifty declined by 10.80 points or 0.18% to end at 5,888.00.

Opening Bell

Markets likely to come out of their consolidation mood with a good start|The US markets closed higher overnight, while the Asian markets were trading mixed|

The Indian markets continued their consolidation mood in last session, lacking any further cues to move higher. However, the major indices managed to hold their crucial levels and added another about a quarter percent despite sluggishness in the global markets. Today, the start is likely to be in green and markets may come out of their consolidation phase. Markets are also likely to get some support with the buzz that the cabinet will approve bills that would raise the cap on foreign direct investment in insurance firms and open the pension sector to foreign investors. The telecom sector will keep buzzing after the Empowered Group of Ministers (EGoM) ratified department of telecommunications (DoT) decision on 100% foreign companies’ eligibility, now they can bid on their own without a partner. However, the EGoM after discussing issue of one time spectrum fee decided to take a final decision on it after receiving an opinion from the Attorney General and from the law ministry. The traders will also be eyeing the movement of rupee that has surged to its fresh five months high in last session. IT stocks may remain under pressure, partially due to strength in rupee and partially due to warning of a darker outlook for 2013 earnings by Hewlett-Packard. The UB group stocks will once again be in limelight, while the deal between Diageo and United Spirits is said to be in the last leg, on the same time talks between the Kingfisher Airlines management and its pilots, engineers failed, as the employees rejected the offer for part payment.