The Indian markets rallied in last session and both the major indices surged by over a percent with buying returning in high beta, while a modest decline in crude too supported the sentiments, easing the inflation fear. Today, the start of the penultimate day of the F&O expiry is likely to be a bit somber and the markets may give up some of their gains on weak global cues. There will be some cautiousness with the United Nations Conference on Trade and Development (UNCTAD) in its latest World Investment Report saying that India's macroeconomic uncertainties remain a major concern for investors even as the country saw a 17% increase in foreign direct investment (FDI) to $28 billion in 2013. There will be some buzz in the India Inc. as the government has proposed relaxing certain provisions for private companies in the new Companies Act. Meanwhile, finance secretary Arvind Mayaram, in an effort to boost the morale of investors has said that government's maiden budget will be “growth-oriented” with some “major changes” in policies to lift the economy to a higher growth orbit from the less than 5% expansion seen in the last two years. There will be some action in the power sector stocks, as a World Bank study has termed distribution utilities as the weakest link of the Indian power sector, and recommended expanding their accountability and freeing up regulators from external interference to make the sector attractive to investors.
The US markets sold off despite good economic data on concerns about the escalating conflict in Iraq, which led traders to cash in some of their profits, overlooking Commerce Department report that new home sales jumped to a six-year high in May. The Asian markets have made mostly a weak start taking cues from the US markets and as the demand for riskier assets dimmed on escalating violence in the Middle East.
Back home, snapping four days losing streak, Indian equity benchmarks staged an enthusiastic performance on Tuesday, by rallying over a percentage point and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. The rally came mainly after Brent crude slipped below $114 a barrel on Tuesday, as data showing near-record high oil exports from Iraq indicated supplies remained unaffected by the escalating violence at the OPEC’s No. 2 producer. Rally in gas utility stocks too aided the sentiments on reports that the government may soon finalise hike in natural gas prices and that the price hike will be lower than that as per a formula adopted by the previous UPA government that recommended doubling the price. Meanwhile, government has set deadlines for inter-ministerial consultation on Cabinet and Cabinet Committee notes, in order to expedite the decision making process. The Reserve Bank of India has released timelines for regulatory approvals and a citizens’ charter for delivery of services as part of implementation of the non-legislative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC). On the global front, Asian markets rallied on Tuesday, though European markets mostly started in the red. 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. Frontline indices managed to settle near intraday high levels with Sensex surpassing its crucial 25,350 bastion, while Nifty ended near its crucial 7,600 mark. Recovery in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 60.10 at the time of equity markets closing as compared to Monday’s close of 60.20, tracking gains in domestic equity markets. Finally, the BSE Sensex soared by 337.58 points or 1.35%, to 25368.90, while the CNX Nifty surged by 86.85 points or 1.16%, to 7,580.20.
