Markets to get a flat start; may move higher in latter part of trade

The Indian markets outsmarting the regional peers continued their surge, closing at another record high in last session. Today, the start may remain cautious and some profit booking may appear going ahead of the F&O expiry week. There will be some concern with a Reserve Bank of India official stating that India continues to face threats on the growth and external sector fronts. Also, there is report that indirect tax mop up inched up by 4.5 percent in the April-June quarter of the current fiscal, much lower than 25 percent increase envisaged in the Budget for the full 2014-15 fiscal, due to decline in custom duty and excise duty collections. Meanwhile, RBI governor Raghuram Rajan has said that India is opening its short-term debt market to foreign investors, but liberalisation will be “in a measured way” to avoid causing volatility. The insurance related companies will keep buzzing, as India Inc has welcomed the Cabinet approval to raise FDI ceiling in insurance, saying that the move will drive capital infusion in the cash-starved sector by attracting investments from foreign players.

There will be lots of important result announcements to keep the markets ticking. Allahabad Bank, Alstom India, Ashok Leyland, Gujarat Pipaav, HT Media, Indiabulls Real Estate, Indian Bank, JK Lakshmi Cement, JustDial, Kalindee Rail Nirman, LIC Housing Finance, Novartis India, Punjab National Bank, Omaxe, Raymond, Suzlon Energy, UCO Bank and Wyeth are among many to announce their numbers today.

The US markets showed another lackluster trade and ended flat in last session, as stocks showed a lack of direction throughout much of the day despite the positive news of the unexpected decrease in initial jobless claims. The Asian markets have mostly started in green with the regional indices headed for their 10th advance in 11 weeks. However, the International Monetary Fund has lowered its outlook for world growth.

Back home, extending their northward journey for eighth consecutive session, boisterous benchmarks once again logged new record highs with frontline indices surpassing their crucial 7,800 (Nifty) and 26,200 (Sensex) bastions on Thursday. Earlier, both Sensex and Nifty slipped in red and traded in a narrow range. However, a recovery from lower levels was staged in the last hour of trade led by buying in banking, metals, FMCG and technology stocks. Overall, sentiments remained up-beat after foreign portfolio investors (FPIs) bought shares worth a net Rs 652.40 crore July 23, 2014, as per provisional data from the stock exchanges. Investors also remained optimistic on report that India’s rainfall deficit reduced by 11 percentage points to 25% from 36% a week ago on the back of steady momentum in monsoon rains over the last seven days. Further, Cabinet's approval for 49% foreign investment in insurance companies through the FIPB route also aided sentiment. Moreover, the government may soon take a decision on easing foreign direct investment (FDI) in Railways and Defence sectors, with the Department of Industrial Policy and Promotion awaiting final comments from the concerned ministries to put these proposals for consideration of the Union Cabinet. Buying got intensified in last leg of trade with European markets traded in the green terrain in early deals, while Asian markets ended mostly in the green. Back home, rally in metal counter too supported the sentiments and stocks like Tata Steel, Hindalco Industries, Sesa Sterlite, Jindal Steel etc. edged higher after a preliminary gauge of Chinese manufacturing activity reached an 18-month high in July. Moreover, scrips of companies related to DTH business also surged, as the regulator Trai has recommended extension of licence period of direct-to-home (DTH) operators from 10 years to 20 years, while proposing bringing down fees to 8% of the adjusted gross revenue. Finally, the BSE Sensex surged by 124.52 points or 0.48%, to 26271.85, while the CNX Nifty gained 34.85 points or 0.45%, to 7,830.60.