Markets to continue the northbound journey with a positive start

The Indian markets despite some choppiness managed to extend their gains for the third straight session last day, as investors turned cautious on lower industrial growth and rising CPI in July. Moreover, weak first quarter earnings from capital goods major BHEL also soured investor sentiment. Today, the start is likely to remain in green, as the regional markets are in jubilant mood. There will be some buzz in the public sector oil marketing companies stocks, as Petrol will become cheaper by Rs 2.18 a litre in Delhi and up to Rs 2.38 in some cities on the Independence Day, bringing its pump prices to the lowest in one year, as the fuel slumped in international markets. There will be some buzz in the Insurance related stocks too as the Insurance Laws (Amendment) Bill, 2008, is likely to be referred to a Rajya Sabha select committee on August 14, the last day of the current Budget session of Parliament. The move will delay the passage of Narendra Modi-led government’s key economic reform until the Winter session. The Bill aims to increase foreign equity from 26 to 49 per cent in the insurance sector.

There will be lots of important result announcements too, to keep the markets buzzing. ABG Shipyard, Ansal Housing, Cipla, Core Projects, Cox Kings, DQ Entertainment are among many to announce their numbers today.

The US markets ended higher in last session, with the Dow Jones industrial average returning to positive territory for the year, as surging biotech shares helped investors shrug off disappointing retail sales data. The Asian markets have made mostly a positive start after a flood of soft economic data led investors to bet on a ceaseless fountain of stimulus from major central banks.

Key domestic benchmarks managed to keep their head above water on Wednesday with Sensex recapturing its crucial 25,900 mark, while Nifty ended near its crucial 7,750 mark. Buying in last hour mainly prevented a down day of trade at Dalal Street as markets for couple of times surrendered to selling pressure, though only to bounce back in green. Overall, sentiments remained up-beat after global rating agency Moody’s estimated that the country’s GDP will grow by 5 percent this year and accelerate further in 2015. Also, the Finance Ministry has said that discussions with the state governments on Goods and Service Tax (GST) are in the final stages and its implementation will help improve transparency and efficiency. However, gains remained capped as traders stayed cautious with government downgrading rain forecast, as the India meteorological department (IMD) forecasted that the June-September monsoon, vital for kharif crops, would be 87 per cent of the long-term average, however it has ruled out drought. On economic front, the Consumer Price Index (CPI)-based inflation rose to 7.96% in July from 7.46% in June, which was an all-time low since the new series was launched in January 2011. Meanwhile, showing signs of sluggishness in the economy, growth rate of industrial production slowed to 3.4% in June, as against 5% in May, mainly due to lower output of consumer goods. The output, as measured by the Index of Industrial Production, had contracted by 1.8% in June, 2013. Global cues remained supportive with European markets were trading in the green terrain in early deals, helped by forecast-beating results from bellwethers such as Swiss Life and Salzgitter. Asian markets too ended mostly in the green. Back home, sentiments remained optimistic on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 370.83 crore on August 12, 2014, as per provisional data from the stock exchanges. Shares of state-run oil marketing companies gained on hopes that results by sector leader Oil and Natural Gas Corporation (ONGC) later in the day would exceed expectations. On the flip side, shares of real estate and banking sectors remained under pressure after retail inflation as measured by the CPI accelerated to 7.96% in July from 7.46% in June. Therefore, RBI is likely to maintain a cautious stance in the next policy too. Finally, the BSE Sensex gained 38.18 points or 0.15%, to 25918.95, while the CNX Nifty added 12.50 points or 0.16% to 7,739.55.