Markets to make a positive but cautious start of the new week

The Indian markets surged by about two percent in last session, supported by broad based buying. Today, the start of the new holiday truncated week is likely to be a bit cautious but positive. Marketmen will be reacting to the data of eight core sector, whose growth plunged to eight-month low of 1.9 per cent in September much lower than 5.8 per cent in August this year, as output in crude oil, natural gas and fertiliser declined. However, traders will get some support with Finance Minister Arun Jaitley’s statement that economic growth in the current fiscal will be in the 5.5-5.9 per cent range and declining prices of crude oil and food will help lower inflation. FM has outlined major priorities of the government as reviving and sustaining higher GDP growth, increasing savings, fiscal consolidation, keeping the Current Account Deficit at moderate level and reviving investment cycle, among others. There will be some buzz in the aviation sector stocks, as jet fuel (ATF) rates have been cut by a steep 7.3 per cent, the fourth straight reduction in prices since August on back of falling international oil rates. Auto sectors too will keep buzzing with the their announcement of monthly sales numbers, most of the major car makers have announced flat or lower sales growth in October despite festive season.

The US markets ended higher in last session supported by good consumer sentiment data. The Asian markets have mostly made a green start taking cues from the US markets and data that China’s manufacturing rose last month led by global recovery, although the country is heading for the slowest full-year expansion.

Back home, extending their winning streak to fourth straight session, Indian equity benchmarks scaled yet another lifetime closing high levels on Friday, which took Nifty above its crucial 8,300 mark, while Sensex surpassed psychological 27,850 mark with gains of around two percentage points. 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 on sustained fund inflows, driven by a slew of economic reforms announced by the government amid optimism over strong corporate earnings. Some support also came after government announced austerity drive. The Finance Ministry in wake of lower revenue realisation till date, has issued new austerity measures, including 10 per cent cut in non-Plan expenditure and ban on creation of new posts. Also, the government has said that it is committed to improving the savings rate and plans to launch new products to achieve the objective. Buying got intensified after European markets made a strong start on Bank of Japan (BoJ) surprise move to substantially expand its bond buying program which is likely to increase liquidity in the global equity market; moreover, Asian markets rallied. 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. Sentiments also remained jubilant on report that foreign institutional investors turned aggressive buyers in Indian equities after they remained net buyers to the tune of Rs 1,257 crore on Thursday. Appreciation in Indian rupee too supported the sentiments, as stronger Asian currencies and local equities aided the Indian unit. Finally, the BSE Sensex surged by 519.50 points or 1.90%, to 27865.83, while the CNX Nifty soared by 153.00 points or 1.87% to 8,322.20.