Markets to extend the recovery mood with a positive start

The Indian markets after a choppy trade and plunging to their intraday lows in second half made smart recovery in final hours to make a flat closing in last session. Today, the start of the penultimate session of long F&O August series is likely to be in green on upbeat global cues. There will be lots of F&O related activities keeping the markets momentum going. There will be some buzz in the oil & gas stocks, as Oil Ministry will seek Cabinet nod for freeing diesel prices after retail rates achieve parity with global levels, and has proposed to cut subsidy payout by upstream firm like ONGC and Oil India by half. Companies related to defence supply too may see some action, as the government has notified increase in foreign direct investment (FDI) limit to 49 percent through approval route in the defence sector. There will be some action in banking stocks too after the State Bank of India and HDFC brought down home loan rates, compelling others to follow the suite. On the other hand steel companies may see a mixed response to the report that steel consumption in the country grew at a slower pace during April-July 2014 at 0.6 per cent, but witnessed a 30 per cent growth in exports.

The US markets ended in green with S&P topping 2000 level for the first time on closing basis, on the back of strong economic data and a flurry of merger news. Consumer confidence in the US improved for the fourth consecutive month in August. The Asian markets have made mostly a positive start tailing US cues. Though, the initial gains were modest but traders were getting support with strength of the world’s largest economy after good durable goods and consumer confidence data.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Tuesday and ended the session mixed, pairing most of their early losses, supported by short-covering in beaten down but fundamentally strong stocks. Nevertheless, traders remained cautious ahead of Russia and Ukraine Leaders meet later in the day amidst fears of escalation of ongoing geo-political tensions. Earlier, markets after a positive start entered into red terrain on the back of feeble cues from regional counterparts and extended their downfall to touch intraday lows. The indices even went on to test important psychological 26,300 (Sensex) and 7,850 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon.  Traders remained cautious ahead of the release of Q1FY15 GDP and Current Account Deficit (CAD) numbers. Street widely expects Asia’s third largest economy is likely to grow 5.3% in the first quarter of this fiscal (April-March), up from 4.6 percent in January-March, which would be the fastest since the quarter that ended in March 2012. On the global front, European markets traded mostly in the red in early deals, while Asian counters too ended mostly in negative terrain. Back home, power stocks witnessed yet another rough session of trade. Mass cancellation of the blocks would be a worst-case scenario for the Power sector as this would add to a shortage of coal for power plants. Stocks related to banking sector too remained under pressure as the Reserve Bank of India Governor Raghuram Rajan has cautioned finance secretaries of state governments against debt waiver schemes as banks are already starved of capital. On the flip side, shares of pharmaceutical companies continued their northward journey with most of the frontline stocks logging their lifetime high levels after reporting healthy results for the June quarter. Finally, the BSE Sensex gained 5.79 points or 0.02%, to 26442.81, while the CNX Nifty lost 1.55 points or 0.02% to 7,904.75.