Markets to extend the rally mood with a positive start

The Indian markets bounced back in last session and went for a big rally supported by broad based buying. Today, the start is likely to be good and the indices will widen the rally mood taking cues from global markets. Traders will be getting some comfort with international credit rating agency Crisil saying that the Indian economy is well prepared to deal with any eventuality arising out of spike in the interest rates by the US Federal reserve. Also, there are reports that Prime Minister Narendra Modi has taken direct control of a project-monitoring body to fast-track investments worth almost $300 billion and revive manufacturing in the country. This could help firms planning coal, power, steel and infrastructure project early clearance. The coal and power stocks will continue buzzing with the government caming out with draft rules for e-auction of 101 cancelled coal mines in the first phase and fixing a floor price of Rs 150 per tonne for sectors like steel, sponge iron, cement and captive power. Oil and gas stocks too will be in action on report that the government will give firms selling CNG and piped cooking gas top-most priority for allocating the scarce domestic resource. Sugar stocks may react to a report that the government will soon take a final decision on extending subsidy for exports of raw sugar in the current 2014-15 marketing year.

The US markets surged in last session, extending their rally on the Federal Reserve’s monetary policy announcement. Buying interest was also generated by a Labor Department report showing an unexpected drop in weekly jobless claims. The Asian markets too have extended their jubilation with a positive start and led by Japanese market which is up by around 2%, ahead of the Bank of Japan’s monetary policy announcement today.

Back home, Snapping five days losing streak, Indian equity benchmarks staged an enthusiastic performance on Thursday, by rallying over one and a half percentage point and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and markets traded jubilantly throughout the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. The rally came mainly after the US Fed said it was on course to raise interest rates, though not right away. Some support also came as Russia’s rouble stabilised after dramatic falls this week, reducing some of the fears of financial contagion to emerging markets. Sentiments also remained up-beat with cabinet approving a constitutional amendment bill to rationalise state and central indirect taxes into a harmonised goods and services tax (GST). The bill is likely to be tabled in the ongoing winter session of Parliament that concludes on December 23. Also, the Asian Development Bank has said that India is on track to achieve projected 5.5 percent economic growth rate in 2014-15 as declining oil prices present a golden opportunity for many beneficial reforms. Global cues too remained supportive with European counters making a jubilant start and Asian markets ending mostly in the green. 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. Frontline indices managed to settle near intraday high levels with Sensex and Nifty recapturing their crucial 27,100 and 8,150 levels respectively. Recovery in Indian rupee too supported the sentiments. Finally, the BSE Sensex surged by 416.44 points or 1.56%, to 27126.57, while the CNX Nifty soared by 129.50 points or 1.61% to 8,159.30.