Weak global cues continued to play spoilsport at the markets as the 30-share Sensex remained volatile even on Tuesday. Though the Sensex inched up just 40 points after shedding 159 points on Monday, investors remained concerned about soaring deficits throughout Europe despite the $1-trillion bailout package offered to Greece by the IMF and the EU. And if that was not enough, another report from the Federal Reserve Bank of New York showed that manufacturing growth slowed in the US last month, which spooked markets there. In another part of the world, China?s soaring real estate prices and the government?s aggressive posturing on slowing down lending could potentially slow growth in the world?s fastest growing economy, something that dampens investor spirit. At home, while analysts are betting on the consumer growth story, investors continue to scout for safety under the defensive stocks. The sectoral indices at the BSE ended mixed bag with consumer-driven sectors like healthcare and fast moving consumer goods remaining top gainers while sectors like IT, metals, realty and gas, which had witnessed strong interest from foreign institutional investors until last month, dropped significantly.
Though global cues will continue to affect Indian stocks, strong domestic factors like rebound in corporate earnings, early indications of a normal Southwest monsoon, which has hit the Andaman coast ahead of time, and better-than-expected inflows from the 3G auction, which would help contain fiscal deficit, bode well for the markets. Interestingly, though gold prices still continue to rise, fall in prices of base metals like aluminium and zinc, and crude prices sliding to $71 a barrel from a high of $85 a barrel in April, will help companies to marginally reduce their input costs in the quarter-ending June this year. As the current phase of growth is going to be investment-led, infrastructure and construction companies are reporting a strong order pipeline. This was evident from the quarterly result of L&T, which reported a 44% rise in net profit in the quarter-ended March and its order book was at an impressive Rs 1 lakh crore. Going ahead, cues emanating from Europe and China will be crucial in the days to come and the markets are expected to remain range bound. However, a big question mark arises now for the IPOs that have been lined up, especially in the realty sector. These may now get delayed because of market volatility.
