Markets to get a soft-to-cautious start of the new week

The Indian markets supported by some late hour buying after S&P upgraded its rating outlook, managed a positive close in last session. Today, the start is likely to be soft-to-cautious and markets will be analyzing the global situation for getting any direction. There will be some cautiousness with the upcoming RBI policy announcements too, though the street is expecting the governor to keep the rates unchanged this time. Meanwhile, Finance Secretary Arvind Mayaram has said that growth rate in the current fiscal will be in range of 5.5-5-9 per cent, exceeding Standard and Poor’s estimate of 5.5 per cent. Traders will be getting some support on report that with chances of mopping up better revenues than estimated, the Government has cut down its market borrowing by Rs 8,000 crore at Rs 5.92 lakh crore. Lower borrowings will mean that more money will be available for banks to lend to the private sector and individuals, hence the banking stocks will be in limelight today. Coal and power stocks too are likely to remain in action, as the Coal Ministry has asked Power Ministry to review the fuel import plan for this fiscal, as the target set is not commensurate with the plants' capacity addition envisaged for FY 2015.

The US markets moved higher in last session on bargain hunting and positive economic data, partly offsetting the substantial pullback seen in the previous session. The Asian markets have made a mixed start with some of the indices trading lower led by the sharp fall in the Hong Kong markets after the incident of clashes between police and pro-democracy protesters.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Friday and snapped the three days losing streak with a gain of over half a percent, supported by short-covering in beaten down but fundamentally strong stocks amid S&P rating upgrade. Nevertheless, traders remained concerned with the Reserve Bank of India (RBI) Governor, Raghuram Rajan reiterating that persisting inflation is a major concern and it has to be contained, dashing any hopes of rate cut in its upcoming policy review. The indices even went on to test important psychological 26,200 (Sensex) and 7,850 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon.  Recovery which took place in last hour of trade mainly helped benchmarks to regain their positive trajectory on report that S&P has revised India’s credit outlook up to ‘stable’ from ‘negative’. While the agency maintained India’s rating at BBB-, the revision in outlook will serve to be a positive for India. This development came after PM Narendra Modi’s government, spurred by flurry of the positive economy data, pitched for a credit ratings upgrade. India's economy expanded at its fastest pace 5.7%. Some support also came after Asian Development Bank (ADB) has said the economy shows a new promise of turnaround after the election brought a stable government in May and revised India’s GDP upwards by 0.3 percent to 6.3 percent in 2015. Also, assuring red carpet to investors, Commerce and Industry Minister Nirmala Sitharaman has said the government is fully committed to creating business- friendly environment to boost the manufacturing sector. On the global front, European counters traded close to a one-month low in early deals, while Asian markets ended mostly in the red. Back home, appreciation in Indian rupee too supported the sentiments. Buying was also witnessed in pharma space, led by rally in shares of Sun Pharmaceutical Industries and Ranbaxy Laboratories which rallied on report suggesting that a team of US FDA inspectors, which recently conducted a surprise audit on a Gujarat unit of Sun Pharma, has submitted Form 483. Finally, the BSE Sensex surged by 157.96 points or 0.60%, to 26626.32, while the CNX Nifty gained 57.00 points or 0.72% to 7,968.85.