Markets to get a cautious start on weak economic data

The Indian markets returned to their rally mood with the start of the new week and both the major indices surged by over a percent in last session. Today, the start is likely to be cautious, although the other regional indices are gaining. Traders will be concerned about some disappointing economic data, while the Core sector output rose 2.3% in May, almost half the 4.2% rise in April and its lowest in last four months, the fiscal deficit had already reached Rs 2.4 lakh crore, 45.6% of the budget by May. Marketmen will also be concerned about the rising prices, though Prime Minister Narendra Modi taking stock of the situation has asked the states to take urgent measures against hoarding and ensure uninterrupted flow of supplies. There will be some buzz in the realty and healthcare stocks after the government ordered maintenance of cost records and audit for real estate companies, hospitals and educational institutions to drive in transparency and keep a check on their costing. Today, the PSU oil marketing companies are likely to be in action as the Petrol price has been hiked by a steep Rs 1.69 per litre and diesel by 50 paise a litre due to rise in international crude prices on Iraq crisis.

The US markets made a mixed closing as the bourses lacked direction throughout the trading day ahead of the release of some key economic data later in the week. Traders largely shrugged off the National Association of Realtors data showing a sharp jump in pending home sales in May. The Asian indices have made a mixed start, though most of the regional indices are in green led by the Japanese market on report that large Japanese companies across all industries plan to increase capital spending by 7.4 percent this fiscal year.

Back home, boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying over one percentage point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with decent gains 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 stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 7,600 (Nifty) and 25,400 (Sensex) bastions as investors took to hefty across the board buying. Sentiments remained jubilant on report that the new government may enhance the Plan expenditure for 2014-15 by around Rs 11,000 crore in the Budget next month, which would be about 2 per cent higher than what was provided in the previous fiscal’s budget. Some support also came from report that the CII Business Confidence Index (CII-BCI) for the April-June quarter of 2014-15 rose from 49.9 in the Q4 FY14 to 53.7 points in Q1FY15, above 50 mark that separates strong business sentiments from weak. Global stocks surged on track for their fourth straight quarter of gains, European markets traded mostly in the green, while Asian markets shut shop mostly on positive note. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Meanwhile, rally in shares of state-owned banks too supported the sentiments after the government decided to create a holding company structure for public sector banks before the Budget. Shares of public oil marketing companies, namely BPCL, HPCL and IOC too remained on buyers’ radar on lower Brent crude prices. Globally, Brent futures dipped towards $113 a barrel on Monday, adding to last week's fall as fears of a disruption to supplies from Iraq eased after government forces launched a pushback against a Sunni militant takeover of large areas of the country. Moreover, steel stocks too edged higher on report that Eastern region is set to push India's steel capacity with an investment of nearly Rs 9 lakh crore for creating an additional 160 million tonnes per annum (mtpa) capacity in the next 10-15 years. Finally, the BSE Sensex soared by 313.86 points or 1.25%, to 25413.78, while the CNX Nifty surged by 102.55 points or 1.37%, to 7,611.35.