Markets likely to make a flat-to-positive start

The Indian markets picked up pace in the second half of trade in last session and managed a positive close after slipping sharply in red in early deals, though the gains were mainly in the bluechips and the broader indices did not participated in the recovery. Today, the start is likely to remain cautious but in green and Nifty may cross the 7700 level in first half of the trade. However, the monsoon concern will keep looming large with the country expected to receive a below-normal monsoon rainfall of 93 percent this year, which could drag down GDP growth. Meanwhile, in his efforts to minimise decision-making processes, Prime Minister Narendra Modi has scrapped four cabinet committees, including one on Unique Identification Authority (UIDAI). Today, the mining related stocks are likely to see some action, as Industry body CII has asked the government to declare mining as a strategic and infrastructure sector which is critical for the manufacturing growth of the nation. However, the oil & gas sector may not be very enthusiastic as minister of state for petroleum and natural gas Dharmendra Pradhan has said that government is looking at all aspects of gas pricing and a decision would be taken at an appropriate time.

The US markets ended flat going through another choppy trade in last session. The early fall in the markets was partly due to profit taking, however there was recovery in latter trade after Commerce Department released a report showing a much bigger than expected increase in wholesale inventories in April. The Asian markets have mostly made a soft start and some of the indices fell from a three-year high after the World Bank cuts its global economic growth forecast.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Tuesday and ended the session slightly in the green, pairing all their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Domestic bourses reeled under selling pressure during most of the session as investors turned cautious on report of poor monsoons, after weather officials highlighted 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. Also President Pranab Mukherjee had 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. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped domestic gauges to re-conquer their crucial 7,550 (Nifty) and 25,650 (Sensex) bastions. Some comfort also came after Society of Indian Automobile Manufacturers (SIAM) reported that domestic passenger car sales grew by 3.08% to 1,48,577 units last month as compared with 1,44,132 units in May 2013. Moreover, total two-wheeler sales during the month grew by 16.3% to 14,02,830 units from 12,06,173 units in the same period of the previous year. Positive opening in European counters too supported the sentiments, while Asian markets too ended mostly in the green terrain. Back home, some support also came from report that foreign institutional investors (FIIs) bought shares worth a net Rs 536.68 crore on June 9, 2014, as per provisional data from the stock exchanges. Meanwhile, stocks related to software and technology counters edged higher on the back of depreciation in rupee against dollar. Moreover, FMCG stocks, which lost steam after Indian Meteorological Department (IMD) forecasted rains to be below normal this year as the chances of El Nino occurring during monsoon being very high, too recovered by the end of trade. Finally, the BSE Sensex was up marginally by 3.48 points or 0.01% at 25583.69, while CNX Nifty settled at 7656.40, up by 1.80 points or 0.02%.