Markets to get a cautious start; Railway budget eyed

The Indian markets made a jubilant start of the new crucial budget week and both the major indices gathered gains of around half a percent in the last session. Today, the start is likely to be a bit cautious but traders will be eyeing the big event of the Railway Budget, which can give a sneak peek to the upcoming Union Budget, with fare and freight hike already effected, traders will be eyeing some reform measures and investment in the sector, whole rail related stocks are likely to remain in action throughout the day. The government may announce plans to bring private money into the sector, including by allowing foreign direct investment into the network, a move resisted by the railways in the past. Companies related to insurance business are likely to be in limelight with the government proposing to drop a crucial rider for increasing the foreign direct investment (FDI) limit in the insurance sector to 49 per cent from the current 26 per cent. There will be some buzz in the capital goods stocks, as the EEPC India has said that engineering exports from the country can surpass the $70 billion target in 2014-15 if 3 percent interest subvention is extended for the entire financial year.

The US markets coming out of a long weekend, gave up some ground in last session and ended lower mainly on profit booking with worries about the outlook for interest rates also weighing on the sentiments. The Asian markets have made mostly a soft start as the yen extended gains.

Back home, Monday’s session turned out to be a fabulous day of trade for the Indian equity markets, which scaled fresh highs for yet another session. Benchmark indices extended their previous session’s rally and hit fresh record high with Sensex surpassing 26,100 mark as pre-budget rally continued amid expectations that Finance Minister Arun Jaitley will announce measures in the Budget aimed at bolstering economic growth. Frontline gauges, after a positive start, traded in tight band throughout the session, while buying in last leg of trade took the benchmark equity indices to-day’s high point. Sentiments remained up-beat after FICCI’s Business Confidence index value climbing to a 14-quarter high of 69 in the current round, up from 60.8 in the previous survey. Sentiments were also buttressed on report that overseas investors have pumped in a staggering over $20 billion into the Indian market in the first half of the year, mainly on hopes of a stable and reform-oriented government at the Centre. Meanwhile, Finance Minister has said that there was no need for panic as country has enough food stocks. On the global front, European counters traded in the red in early deals, while Asian stocks exhibited mixed trend. Back home, foreign portfolio investors (FPIs) bought shares worth a net Rs 943.19 crore July 4, 2014, as per provisional data from the stock exchanges. Rally in software and technologies counters too aided the sentiments on expectation of strong revenue growth during the recently (April-June) concluded quarter. Additionally, railway-related stocks remained on buyers’ radar for the second day in a row ahead of the Railway Budget on July 8. On the flip side, stocks of public sector oil marketing companies (OMCs) edged lower after Ministry of Petroleum and Natural gas clarified that it is not proposing any increase in prices of subsidised LPG and kerosene prices after certain media reports speculated about the possibility of increase in the prices of subsidised LPG and PDS Kerosene. Finally, the BSE Sensex surged by 138.02 points or 0.53%, to 26100.08, while the CNX Nifty gained 35.55 points or 0.46%, to 7,787.15.