Markets to make a positive start on sanguine global cues

The Indian markets maintained their gaining momentum and despite early choppiness and some late selling, managed another positive close in last session with Sensex and Nifty touching fresh life time highs intraday. Today, the start is likely to be in green and the bourses may move modestly higher tailing global cues and supported by slump in crude prices. Also, there is some positive statement from the international ratings agency Moody’s quarterly Global Macro Outlook report that it expects India to witness “sustained robust growth” over the next two years. There is likely to be buzz in the financial sector today and the NBFC’s may come under pressure, as tightening norms for non-banking financial companies (NBFCs), the RBI has raised capital adequacy requirement and net owned fund limit, among others, with an objective to mitigate risks in the sector. Now all NBFCs will have to take a certificate of registration for continuing business and they must have net-owned funds of at least Rs 1 crore by 2016 and Rs 2 crore by 2017. There will be some buzz in coal and mining sector stocks too, as a committee in its meeting today will be mulling the coal block auction.

The US markets ended modestly higher in last session with the Dow and the S&P 500 reaching to new record closing highs, the modest gains were on report that China showed stronger than expected export growth in the month of October. The Asian markets are mostly in green in early trade taking cues from the US markets and on hopes that Fed would not raise the interest rates immediately. Japanese market too has recovered after the nation’s current account surplus surged to 963 billion yen.

Back home, buying activity which took place during last leg of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water on Monday with Sensex recapturing its crucial 27,850 mark, while Nifty ended tad below its crucial 8,350 mark. Sustained foreign funds inflow and widespread buying by investors on hopes of acceleration in economic reforms process after Prime Minister Narendra Modi expanded his Council of Ministers, mainly buoyed the trading sentiment. Domestic sentiment was also buoyed in early trade as Finance Minister Arun Jaitley had yesterday said that the government will amend the tough land acquisition law. However, gains on the up-side remained capped on RBI’s deputy governor’s hawkish statements, HR Khan, who pouring cold water on hopes of rate cut in upcoming monetary policy, highlighted that recent decline in inflation did not mean the decline was permanent. He also emphasized that though decline in crude oil prices and other commodities were beneficial to Indian economy, but policy makers just could not jump their guns until they were convinced the trend was firmly established. Global cues too remained supportive with European markets making a firm start and the Asian markets too ended mostly higher. Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 61.49 per dollar at the time of equity market closing against the Friday’s close of 61.62 on the Interbank Foreign Exchange.  Sentiments also remained supportive on report that foreign institutional investors were net buyers in Indian equities worth Rs 2,537.13 crore on Friday, as per provisional stock exchange data. Meanwhile, FMCG counter topped the list on BSE, led by gains of Colgate-Palmolive (India) stocks, which rallied  over 5%, after reporting an 18% increase in net profit at Rs 130 crore for the second quarter ended September 30, 2014, on back of strong volume growth. Also, buying was witnessed in pharmaceutical sector led by rally in Sun Pharma after its US subsidiary, Taro Pharmaceutical Industries, reported a strong 49% year on year growth in net profit to $143.4 million for the quarter ended September 2014. Finally, the BSE Sensex added 6.10 points or 0.02%, to 27874.73, while the CNX Nifty gained 7.25 points or 0.09% to 8,344.25.