Markets to extend the euphoric mood with a positive start

The Indian markets extended their euphoric mood and surged to fresh record highs on the day when new government completed 100 days in office. The markets logged their third consecutive record high. Today, the start is likely to be in green following the positive cues from the regional peers, the mood is likely to remain upbeat with current account deficit narrowing sharply to 1.7 per cent of GDP in the Apr-June quarter of 2014-15 compared to 4.8 per cent of GDP in the same quarter of 2013-14. There will be some buzz in the coal and power stocks, amid controversy of SC declaring the allocation of 218 coal blocks as “illegal and arbitrary”. The union environment ministry has eased the clearance process to increase production for coal mines with 20 million tonnes per annum capacity. However, traders will be eyeing the movement in rupee which weakened for the fourth straight session, dropping the most in three weeks, amid caution ahead of key events including a European Central Bank meeting and US monthly jobs data.  There will be some action in PSU oil marketing companies as well, as the Oil Minister Dharmendra Pradhan hinting at deregulation of diesel prices, said that there were good signals from international market and his ministry will approach appropriate forum for freeing of rates.

The US markets made a mixed closing coming after a long weekend. Though, the bourses largely held on to the bulk of their recent gains but trade remained lackluster, showing a lack of direction throughout the trading session, despite the report that activity in the US manufacturing sector unexpectedly grew in  August. The Asian markets are trading mostly in green in early deals, led by Japanese markets as the yen slid to an almost eight-month low.

Back home, extending their winning streak to fourth straight session, Indian equity benchmarks scaled yet another lifetime closing high levels on Tuesday, which took Nifty above its crucial 8,050 mark, while Sensex surpassed psychological 27,000 mark with gains of over half a percent. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Sentiments remained up-beat after India’s current account deficit (CAD) for this financial year’s first quarter, April to June,  narrowed sharply to 1.7 per cent of gross domestic product ($7.8 billion) from 4.8 per cent of GDP ($21.8 billion) in the corresponding period of 2013-14. Further, India’s balance-of-payments remained in surplus for the third straight at $11.2 billion for Apr-June 2014. Some support also came in with Prime Minister Narendra Modi’s statement that his government is determined to push tax and financial sector reforms to improve business environment. Moreover, investors shrugged off report that the growth in eight core industries slowed down to 2.7 per cent in July after surging to a nine- month high of 7.3 per cent in June due to decline in production of crude oil, natural gas, refinery products, fertilisers and steel. Global cues too remained supportive with European markets trading higher in early deals, while Asian markets too ended mostly in the green. 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. Some support also came on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 554.14 crore on Monday, as per provisional data from the stock exchanges. Meanwhile, stocks related to Auto space too edged higher as all the major manufacturers have reported good sales numbers for the month of August. Car sales rose by 17.9% in August, driven by top three manufacturers -- Maruti Suzuki, Hyundai Motor India and Honda Cars India, marking the third straight month for a double-digit growth in car sales. Additionally, cement makers remained in demand on expectation of improvement in demand along with an increase in prices once monsoon season ends. Finally, the BSE Sensex surged by 151.84 points or 0.57%, to 27019.39, while the CNX Nifty soared by 55.35 points or 0.69% to 8,083.05.