Markets to get a green start on good global cues

The Indian markets bounced back and managed a close in green in the previous session. Today, the start is likely to be positive on good global cues and markets will add up to their gains after showing a range bound trade for last two sessions. Traders will be taking some support with the Reserve Bank of India (RBI) stating that the Indian economic growth is poised for a take-off amid signs of economic reforms, fiscal consolidation and projected improvement in investments. The central bank forecasts the gross domestic product (GDP) to grow around 5.5% in 2014-15 after two painful years of sub-5% growth. There will be some buzz in the banking stocks as the RBI proposes to cut banks' group exposure limit by as much as 15 percentage points to 25% of a bank's capital, down from 40% now, to reduce the systemic risk posed by lending too much to any single business house. Oil stocks too are likely to be in action on reports that Oil Ministry is looking at replacing the controversial Production Sharing Contracts (PSC) with simpler revenue-sharing regime, in order to revive interest in oil and gas exploration.

The US markets moved higher in last session although the buying interest was somewhat subdued, but bourses moved higher mainly on the back of some upbeat economic data, including a report from the National Association of Realtors showing that existing home sales unexpectedly rose to a ten-month high in July. The Asian markets have made mostly a green start, extending their weekly gains with Japanese market headed for a 10th day of gains, the longest winning streak in 26 years.

Back home, resuming their northward journey after a day of halt, Indian equity benchmarks ended the session slightly in the green on Thursday. Markets, which giving away all their early gains, entered into negative territory in noon trade, recovered in last leg of trade on the back of rally in shares of public sector banks and oil marketing companies (OMCs). Sentiments remained up-beat on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 251.36 crore on August 20, as per provisional data from the stock exchanges. Meanwhile, some respite came in on long pending GST, as the state Finance Ministers resolved to lower the threshold limit for imposing Goods and Service Tax (GST) from Rs 25 lakh to Rs 10 lakh, and asked the Centre to include the provision for GST compensation in the Constitutional Amendment Bill. However, gains remained capped on concern from the rainfall front, although monsoon revived significantly in the middle of last month, bouncing back from an alarming 43% seasonal deficit to barely 16% after a few weeks of heavy showers, deficit has again widened to 18% for the entire country with rainfall dipping in the past two weeks. Recovery in European counters, after a sluggish opening, too supported the sentiments, however, Asian markets ended mostly lower. Back home, rally in auto shares supported the sentiments. Stocks like Bajaj Auto, M&M, Hero MotoCorp, Maruti Suzuki and Tata Motors all edged higher on hopes that sales growth in the forthcoming months ahead of the season are likely to be encouraging. Apart from upbeat first quarter results, better-than-expected bookings for new models launched also helped boost sentiment. Stocks related to banking sector too remained on the buyers’ radar after Finance Minister Arun Jaitley said that the government was working towards bringing in more professionalism in the functioning of banks and improving risk management, amid the backdrop of the recent scams in some public sector banks. Finally, the BSE Sensex gained 45.82 points or 0.17%, to 26360.11, while the CNX Nifty added 15.80 points or 0.20% to 7,891.10.