Markets likely to get a cautious start on monsoon concern

The Indian markets extended their rally mood and added about another a percent to their recent rally, on hopes of reform measures and improvement in economy. Today, the start is likely to be a bit cautious and bourses may take some breather, as the global cues are not very supportive. Traders are likely to remain concerned about the report of poor monsoon, as the weather officials have said that this year’s monsoon rains have been deficient so far and the rainfall between June and September could be between 90 and 96% of the long-term average. Meanwhile, President Pranab Mukherjee has said that the current economic situation is extremely difficult and expressed the government's commitment to put India back on high growth path, while containing inflation and making tax regime non-adversarial. India Inc. may get some relief with Union Finance Minister Arun Jaitley underscoring the need for finding a quick consensus on the Goods and Services Tax (GST). Fertilizer sector stocks that have been moving higher may get a halt, as it has been reported that there is still no proposal to increase urea prices. There will be some buzz in infra stocks on report that the Ministry of Environment, Forests and Climate Change is in talks with at least seven States, to discuss pending infrastructure projects.

The US markets carried their gains to the new week and ended modestly higher in last session, though the trade remained subdued amid lack of any major economic announcements but traders took heart from the positive cues across the globe. The Asian markets have made a mixed start and some of the indices are trading in red led by the Japanese market on stronger yen, while casino operators slid in Hong Kong after Macau moved to restrict money flows from China.

Back home, jubilation continued on Dalal Street with both the frontline indices snapping the session above their psychological 25,550 (Sensex) and 7,650 (Nifty) levels, ending at fresh all time closing high levels on firm global cues coupled with hopes of wide-ranging reforms by the new government. Boisterous benchmarks once again showcased an enthusiastic performance with investors getting support from report that foreign institutional investors (FIIs) bought shares worth a net Rs 1283.04 crore on Friday as per provisional data from the stock exchanges. Some support also came after President Pranab Mukherjee in a joint session of parliament said that the new government will pursue a broad economic reform agenda focused on job creation through public and private investment that also makes containing inflation its top priority. Some comfort also came from Minister of Commerce Nirmala Sitharaman’s statement that the rising Current Account Deficit (CAD) and galloping prices are the issues which will be tackled on an urgent basis by the government and Finance Minister will announce important measures to reduce the CAD and curb rising prices. Supportive cues from US markets provided lead to local markets, while Asian markets too ended mostly in the green on the back of better-than-expected Chinese exports data. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Meanwhile, shares of real estate companies edged higher after President Pranab Mukherjee in his joint address to the Parliament said that the government proposes proper housing to all citizens by 2022. Stocks related to railway such as Texmaco Rail and Engineering, Kalindee Rail Nirman, Titagarh Wagons, Kernex Microsystems and Hind Rectifiers remained on buyers’ radar after Pranab Mukherjee said that the government will launch a diamond quadrilateral project of high-speed trains. Additionally, fertilizer stocks, RCF, Chambal fertilizers and Tata Chemicals were on investor’s radar after reports suggested of Government planning urea price hike to curb fertiliser subsidies. Finally, the BSE Sensex soared by 183.75 points or 0.72% at 25580.21, while CNX Nifty settled at 7654.60, up by 71.20 points or 0.94% after trading in a range of 7580.25 and 7673.70.