The Indian markets once again suffered sharp cuts on Friday; investors were still to overcome from the pressure of rate hike by RBI and the rise in crude prices too weighed on the sentiments. Today the start is likely to be positive as the global cues are supportive, however the crude prices are still moving higher after the Gaddafi violated cease fire and air bombardment from American, French and British forces took place to protect Libyan civilians from government troops. On the domestic front Finance Minister Pranab Mukherjee has said that the Reserve Bank of India's move to hike key policy rates by 25 basis points would help curb inflationary pressure. On the same time there is a bad news for the oil marketing companies as the Prime Minister’s Economic Advisory Council (PMEAC) has said that the government would wait for inflationary pressure to calm down before freeing the diesel prices. However the PMEAC has exuded confidence that inflation will decline to below 6 per cent in the first few months of the next fiscal, even as the Reserve Bank revised upwards its March-end inflation projection. The PMEAC Chairman C Rangarajan also said that RBI would halt increase in key policy rates once the headline inflation comes down to around 6 per cent.
The US markets managed to close in green on Friday as the Libyan tension eased a bit, also the G7 nations pledge to support Japanese currency from moving higher in the time of crisis helping the markets closed higher. Most of the Asian markets have made a green start and major indices are trading higher by half to one percent.
Back home, Indian benchmarks once again settled in the red zone on the last trading day of the week as hefty profit booking by funds and retail investors continued for the second straight day after the RBI hiked its key policy rates to curb inflation on Thursday. Sentiments remained subdued as investors feared that more rate hikes are on cards as RBI’s tone was hawkish as it battles spiraling inflationary pressures which threaten to derail the robust growth of Indian economy. The gloomy reports from the political front too did no good to the local sentiments as the opposition demanded resignation of Indian Prime Minister following a wikileaks cable showing bribes had been given by the ruling UPA government members for votes during a no confidence motion after an Indo-US nuclear treaty. While in the global space, sanguine cues from the Asian and European markets went largely unnoticed as investors factored in the spike in international crude oil prices which surged in the session after a vote by the United Nations Security Council (UNSC) authorizing the imposition of a no-fly zone over the Libya. The NSE’s 50-share broadly followed index Nifty, breached the crucial 5,400 support level while Bombay Stock Exchange’s Sensitive Index, Sensex infringed the psychological 18,000 mark after shaving off over two hundred fifty points. The broader markets traded with some resilience though and finished with relatively smaller losses thereby outshining their larger peers. Earlier on Dalal Street, the benchmark ricocheted by around 100 points in the opening trade, with finance and other sector stocks rising on the back of supportive cues from overnight US markets which surged around one and half a percent on a slew of good economic reports that helped to put aside the fear of Japanese crisis. However, the frontline indices immediately erased all the opening gains and treaded on a southbound journey thereafter, since unpleasant reports related to the index heavyweight RIL’s lower than estimated gas production from its KG Basin block hit headlines. Sentiments were also dampened after the opposition raised questions on Congress, which is already burdened by corruption charges, culpability after wikileaks cables revelation. The bourses touched intraday lows in the dying hours of session as they infringed crucial support levels to eventually settle with losses of around one and half a percent. Finally, the BSE Sensex plunged by 271.06 points or 1.49% to settle at 17878.81 while the S&P CNX Nifty fell by 72.95 points or 1.34% to end at 5373.70.
