Markets to make a cautious but green start, extending last session’s gains

The Indian markets showed pre-budget exuberance and surged to their historic high in last session, both the major indices gained over a percent for the day. Today, the start is likely to be in green and the markets will carry forward their momentum, however, there will be some cautiousness too after the big rally and some corners may see profit booking. Traders will be getting some comfort with the statement of Agriculture Minister that the monsoon will pick up pace next week and the government is prepared to deal with any eventuality in case of a shortfall. There will be some buzz in the oil & gas stocks, especially the PSU oil marketing companies as the Oil Ministry has ordered that the hikes in both LPG and kerosene rates be put on hold pending consultations with the state governments on state-specific levies. Also, there is a report of CAG stating that the public sector oil marketing companies (OMCs) made Rs 50,000 crore profit in 2007-12 by selling oil and petroleum products to consumers, contrary to the perception that they are selling oil at a loss. Meanwhile, the government has extended the validity period of industrial licence to three years with a provision for further extension of two years, in an effort to enhance the ease of doing business in the country. There will be some action in defence supply related companies with the defence ministry suggesting raising the cap in FDI in defence sector to 49 per cent from 26 per cent.

The US markets ended mostly in green, though the trade remained quiet throughout the session with investors seemed reluctant to make any significant moves ahead of the release of the closely watched monthly nonfarm payroll data on Thursday. The Asian markets have made a cautious start with many of the indices trading marginally in red on mixed data from China, where official gauges of services dropped to 55 from 55.5 in May, while the HSBC Services PMI jumped to 15 month high of 53.1 from 50.7 in May.

Back home, boisterous benchmarks once again showcased an enthusiastic performance, by rallying over a percentage point as budget euphoria gripped Dalal-Street on Wednesday. Sentiments remained up-beat since start as key bourses opened with huge gap on up-side 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 their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for fourth straight session but also recorded their all time closing high, settling comfortably above their crucial 7,700 (Nifty) and 25,800 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got bolstered after Finance Minister Arun Jaitley’s commented that ‘mindless populism’ in policymaking needed to be checked stoke expectations of a pragmatic budget on July 10. Additionally, sentiments also got a lift after FM underscored that a high fiscal deficit and inflation were major challenges for India, which in turn triggered hopes that he could unveil fiscal consolidation measures in his first annual budget. Sentiments also got buttressed after India Meteorological Department (IMD) in its daily monsoon report underscored that the southwest monsoon has further advanced into entire Uttarakhand, Himachal Pradesh and Jammu & Kashmir, some more parts of Uttar Pradesh and some parts of Haryana & Punjab. Global cues too remained supportive with European markets trading higher in early deals, while all the Asian markets shut-shop in green. 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. Some support also came on report that foreign institutional investors (FIIs) continue to bet big on the India story, with their net investment in Indian equities already surpassing the $10 billion mark in 2014. Appreciation in Indian rupee too supported the sentiments. Finally, the BSE Sensex surged by 324.86 points or 1.27%, to 25841.21, while the CNX Nifty soared by 90.45 points or 1.18%, to 7,725.15.