Markets to make a positive start; assembly election results eyed

The Indian markets rallied unexpectedly in final hours of last session to take the bourses above crucial psychological levels. Today, the start is likely to be in green tracking the momentum of the global markets. Traders will be eyeing Jharkhand and J&K poll results, which if goes in favour of the ruling party in centre, may boost the sentiments. However, traders may also get a bit cautious with an official of international credit ratings agency Moody’s statement that high fiscal deficits constrain India’s rating now. There will be some buzz in the coal and power sector, as an advisory group on integrated development of power, coal and renewable energy, in its report submitted to coal minister Piyush Goyal, has suggested opening up the coal sector to augment coal output for fuel-hungry thermal power plants in the country. There will be some cautiousness in IT stocks, as HCL Tech after TCS, it too has raised concern over earnings on dollar strength and there are reports that global banks may remove IT allocations from their annual budget.

The US markets made a positive start of the week, extending the gains for yet another day, with the Dow and the S&P 500 reaching new record closing highs. Traders even ignored report that existing home sales pulled back by much more than expected in the month of November. The Asian markets have made a mixed start with some indices trading lower in early deals ahead of some important data announcement of US economy.

Back home, Monday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over a percent. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels, recapturing their crucial 27,700 (Sensex) and 8,300 (Nifty) bastions. Earlier, markets made flat-to-positive start and traded in tight band for most part of the day’s trade as investors remained concern after Finance Ministry’s Mid-Year Economic Analysis stated that meeting the 4.1 per cent fiscal deficit target for 2014-15 is a ‘major challenge’. There will be another concern from a report that Foreign Direct Investment (FDI) in the country’s services sector, which contributes about 60 per cent to India’s GDP, fell 7.5 per cent to $1.22 billion during the first half of the current fiscal. Markets witnessed a sharp spurt in last hours of trade as investors continued hunt for fundamentally strong but oversold stocks. Some support came in from a private survey which stated that India remains one of the most preferred investment destinations for global investors while domestic companies expect stable economic conditions in the near term. Buying got intensified after European counters made firm opening, while Asian equity benchmarks ended mostly in the green supported by gain in commodity stocks. 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. Recovery in Indian rupee too supported the sentiments. The rupee firmed up against the US dollar and was trading at 63.23 at the time of equity markets closing as compared to Friday’s close of 63.29. Meanwhile, banking shares, which were trading lower in first half of the session, also made a splendid recovery by close of trade. On the flip side, shares of tyre companies like Apollo Tyres, Ceat and JK Tyre witnessed immense pressure as reports suggest of these companies agreeing to procure rubber from the domestic market, which is 25% higher price over international price to aid the fund-starved sector in Kerala. Finally, the BSE Sensex surged by 329.95 points or 1.21%, to 27701.79, while the CNX Nifty soared by 98.80 points or 1.20% to 8,324.00.