Markets to extend the upbeat mood with a positive start

The Indian markets made a smart bounce back, getting some last hour push by the Reserve Bank of India’s announcements that banks can raise long-term funds to lend to affordable housing and infrastructure. The upbeat macro data too bolstered the sentiments. Today, the start is likely to be in green and the RBI’s action will keep playing its part with banking, infra and realty stocks continuing their momentum. There is one more positive news that will further aid up the markets, India's services exports in May rose by 8.8 percent to $13.9 billion. There will be some buzz in the PSU and SME segments of the bourses, as the government has said that all public sector undertakings (PSUs), Central government Ministries and Departments will have to procure at least 20 percent of the products and services required by them from micro and small enterprises from April next year. The telecom stocks too will be in action as the Telecom Regulatory Authority of India (TRAI) has reduced the ceiling rates of domestic bandwidth by up to 60 per cent, in order to bring down fixed-line broadband tariffs. There will be some important result announcements too, to keep the markets buzzing.

The US markets made a mixed closing of the volatile day of trade, as traders focused on remarks by Federal Reserve Chair Janet Yellen, who said that the economy continues to improve but cautioned that the recovery is not yet complete. The Asian markets have made mostly a soft start with most of the indices swinging between gains and losses. Chinese market too was marginally in red despite a report that economy grew in line with the government’s target.

Back home, snapping five-day losing streak, Indian equity benchmarks ended the volatile day of trade with a gain of around a percentage point with frontline gauges recapturing their crucial 25,200 (Sensex) and 7,500 (Nifty) levels, led by buying in rate sensitive shares on hopes that easing inflation may give central bank the much needed comfort to cut key policy rates. After a gap up opening, barometer gauges trimmed most of their gains in afternoon trade tracking weak opening in European counters but hefty buying in last leg of trade help markets to end near intraday high levels. Sentiments remained up-beat since morning after Consumer Price Index (CPI) eased more than expected at 7.31% in June as compared to 8.28% in May. Earlier, Wholesale Price based Inflation (WPI) too fell to a five-month low of 5.53% in June following export curbs by the government on certain commodities. Some support also came after rating agency Moody’s said that the Budget 2014-15 has outlined steps to support faster economic growth, but absence of detailed implementation plan makes it modestly credit positive for India. Supportive cues from US markets and positive closing in Asian markets supported the sentiments. 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. On the currency front, the Indian rupee trimmed early losses and was trading marginally lower at Rs 60.12 against the US dollar compared to the previous close of Rs 60.07 as gains in domestic equities aided sentiment. Meanwhile, metal and mining stocks remained on buyers’ radar ahead of Chinese gross domestic product (GDP) data for the second quarter due to be released on July 16. Besides, steel stocks gained across the board as significant thrust on improving as higher outlay for housing, road, port, urban and rural housing and infrastructure development Union Budget 2014-15 would help improve steel consumption. On the flip side, select stocks from pharma sector remained under pressure with National Pharmaceutical Pricing Authority’s (NPPA) move to bring 108 formulation packs of 50 diabetes and cardiovascular medicines under price control. Finally, the BSE Sensex surged by 221.67 points or 0.89%, to 25228.65, while the CNX Nifty soared by 72.50 points or 0.97%, to 7,526.65.