Markets likely to see early Diwili with a good start

The Indian markets showed the signs of rally and had ended with decent gains in last session. Today, the start of the Diwali week is likely to see some fireworks with a good gap-up opening. Traders will be getting a boost with ruling party’s victory in two state assembly elections of Maharashtra and Haryana, which will give Narendra Modi government a tremendous morale boost to pursue economic reforms. Meanwhile, according to IMF's latest world economic outlook, India is poised to become a USD two trillion economy this year, while its GDP size would cross another milestone of USD three trillion after five years in 2019. There is another news that will be aiding the strength in the markets with the government raising the price of gas from domestic fields to $5.6 per unit, around 33% higher from $4.2 at present. The new price would come into effect from November 1 and would be revised every six months with a view to ensuring “stability in the market.” However, the same decision is likely to weigh negatively on the fertilizers and power stocks. There will be some buzz in the telecom sector, as an inter-ministerial panel of Telecom Commission has said that the proposed telecom spectrum auction should be completed by February 28 next year.

There will be lots of result reactions too, to keep the markets buzzing. Exide Inds, Hindustan Zinc, Jindal Saw, Just Dial, SKS Micro and United Spirits will be announcing their numbers today.

The US markets bounced back in last session on encouraging consumer confidence data and hopes of stimulus by different central banks of the globe. The Asian markets that remained in correction mood in previous session are showing a jubilant performance with some of the indices surging by over two percent, led by the Japanese market which has surged as yen extended its loss.

Back home, Snapping two days losing streak, Indian equity benchmarks ended the session with a gain of around half a percent, amid a rebound in European shares. Domestic bourses witnessed volatility throughout the session as key gauges entered into negative terrain after a flat-to-positive start as sell off by foreign institutional investors (FIIs) was massive who offloaded Indian shares worth Rs 1,128 crore on October 16, 2014. But recovery in second half of trade helped markets to their crucial 26,100 (Sensex) and 7,750 (Nifty) bastions. Traders took some comfort from Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s statement that India is seeing a pick-up in economic growth although more could be done to support that on a sustainable basis, while noting inflation was also easing. He has also said that a growth of 7 percent is possible in short-term but major reforms will be needed to take it to higher levels. Further, expectations that the BJP would form the government in Maharashtra, the country’s largest industrial State, also boosted investor sentiment. Positive opening in European counters mainly supported the sentiments, however, Asian equity indices ended mixed. Back home, the Indian rupee firmed up against the US dollar, tracking gains in Asian currencies. Meanwhile, banking shares remained in demand after the Wholesale Price Index (WPI)-based inflation declined to its lowest level in five years at 2.38% in September from 3.74% in the previous month. Power stocks too participated in the rally despite the looming crisis within sector with over 60 per cent thermal power stations grappling with critical coal shortage. On the flip side, selling was witnessed in software and technology counters, led by around 8% fall in TCS after reporting lower-than-expected Q2 numbers. Finally, the BSE Sensex surged by 109.19 points or 0.42%, to 26108.53, while the CNX Nifty gained 31.50 points or 0.41% to 7,779.70.