Markets to get a flat-to-positive start

The Indian markets turned jubilant despite the Reserve Bank of India (RBI) keeping its key policy rates unchanged, traders got the support with RBI Governor Raghuram Rajan toning down inflation rhetoric. Sentiment was also supported after the RBI eased rules to spur bank lending. Meanwhile, Finance Minister Arun Jaitley described the RBI’s status quo policy as a calibrated approach to strike a balance between growth and inflation. Today, the start is likely to remain positive but traders will continue to be cautious ahead of global developments. Also, a report has showed that India has slipped to its lowest position in over a decade in the foreign direct investment confidence index. There will be some buzz in the export oriented stocks after RBI reduced the availability of funds under the export credit refinance (ECR) window from 50 percent of export credit outstanding to 32 percent, though exporters have said that the move will have no impact. There is not much trigger on the domestic front and traders will keep an eye on Finance Minister's pre-Budget talks with apex industry chambers and trade sector representatives on Friday.

The US markets ended modestly lower after experiencing a relatively lackluster performance throughout the session. However, the downside were capped by a report showing a bigger than expected increase in US factory orders. The Asian markets have mostly made a negative start, retreating from their seven-month high, as investors awaited a report on US jobs and a decision from the European Central Bank on monetary policy.

Back home, extending their previous session’s rally, Indian equity benchmarks ended the volatile day of trade at all time closing high levels with domestic bourses surpassing their crucial 24,850 (Sensex) and 7,400 (Nifty) levels. Sentiments remained up-beat after the central bank kept rates on hold and toned down its inflation rhetoric. The Reserve Bank of India (RBI) in its bi-monthly monetary policy review kept the repo rate and Cash Reserve Ratio (CRR) unchanged at 8% and 4%, respectively as per the street’s expectations. However, the Statutory Liquidity Ratio (SLR) was reduced by 50 basis points to 22.5% of banks NDTL with effect from the fortnight beginning June 14. Besides, RBI also reduced the liquidity provided under the export credit refinance (ECR) facility from 50% of eligible export credit outstanding to 32% with immediate effect. Meanwhile, RBI introduced a special term repo facility of 0.25% of NDTL to compensate fully for the reduction in access to liquidity under the ECR. RBI shall also continue to provide liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system. On the global front, most of the Asian equity indices shut shop in the green terrain after China's factory activity expanded at its fastest pace in five months in May, however, European counters made a sluggish start. Back home, rally in metal stocks too aided the sentiments. Scrips like Sesa Sterlite, Tata Steel, Hindustan Zinc, and SAIL all edged higher on the back of positive manufacturing data in China, the world's biggest consumer and producer of the metal. Additionally, sugar stocks remained on buyers’ radar on hopes that the Modi-led government would help revive the industry by encouraging ethanol blending in petrol and also hike import duty on the commodity to support local prices. On the flip side, banking counter witnessed selling pressure after the Reserve Bank of India left the key interest rate unchanged in its monetary policy review. Finally, the BSE Sensex soared by 173.74 points or 0.70%, to 24858.59, while the CNX Nifty surged by 53.35 points or 0.72%, to 7,415.85.