Markets to make a flat-to-positive start

The Indian markets made a bounce back after two straight sessions of steep fall. Value buying and some positive economic reports supported the markets on upside. Today, the start is likely to be flat-to-positive reacting to the US Fed’s decision to retain interest rates low and end the bond buying program next month. On domestic front there will be buzz in the markets with report of market regulator, the Securities and Exchange Board of India (Sebi) soon issuing a discussion paper on reducing the timeline for follow-on public offers (FPOs) and issue guidelines to deal with wilful defaulters given that there are no restrictions at present on such entities raising funds from the capital market. Meanwhile, there will be cheer in India Inc, as the Reserve Bank of India easing foreign direct investment (FDI) norms has allowed companies to issue equity shares to a resident outside India against any type of fund subject to certain conditions. The oil & gas sector stocks may see some action, as the four-member committee of secretaries has submitted its report on a new gas pricing mechanism, prescribing a rate much lower than the doubling of price approved by previous UPA government. Sugar stocks too will be reacting to the industry body ISMA’s report that India's sugar output is estimated to rise up to five percent at 25.5 million tonnes in the next marketing year starting October despite drop in sugarcane area.

The US markets ended modestly higher in last session after the Federal Reserve's monetary policy announcement. Though, the trade remained volatile but traders seemed pleased that the Fed reiterated its pledge to keep interest rates low for a “considerable time”. The Asian markets have made mostly a green start and the Japanese market has surged over a percent toward a six-year high on a weaker yen.

Back home, Indian equity benchmarks ended the session with a gain of over half a percent on Wednesday as investors opted to buy beaten-down but fundamentally strong stocks after two days of continuous drubbing amid positive global cues. In the extremely volatile session of trade, key gauges made a positive start but looked like slipping below their neutral lines in noon deals, recovery in last leg of trade helped markets to pick up momentum and end with decent gains. Sentiments remained up-beat with the report of Department of Industrial Policy and Promotion that foreign direct investment (FDI) flows into India more than doubled to $3.5 billion in July, compared to FDI worth $1.65 billion in July 2013. Also, the government has got a pat on its back by the international credit rating agency Crisil, which has said that efforts being taken by the Narendra Modi government to boost the real estate sector are in the ‘right direction’. Global cues too remained supportive with European markets trading higher in early deals, while Asian equity markets too shut shop mostly in the green. Back home, appreciation in Indian rupee too aided the sentiments. The partially convertible rupee was trading at 60.92 per dollar at the time of equity market closing against the Tuesday’s close of 61.05 on the Interbank Foreign Exchange. Rally in metal counter too aided the sentiments after China’s economic stimulus raised hopes of a boost in demand in the world's biggest consumer of metals. Moreover, stocks related to steel space remained on buyers’ radar with Steel Ministry saying that Finance Ministry will take a call on withdrawing import duty of iron ore in the face of falling domestic supplies.  Shares of IT majors too remained up-beat on hopes that Fed will stick to its pledge of keeping rates low. Sentiments of the market participants further boosted after China injected $81 billion into major banks. Finally, the BSE Sensex surged by 138.78 points or 0.52%, to 26631.29, while the CNX Nifty gained 42.60 points or 0.54% to 7,975.50.