Markets to make gap-up opening on ECB Stimulus

The Indian markets surged around half a percent in last session on sustained buying by funds and retail investors. Today, markets likely to make gap-up opening as the European Central Bank (ECB) took the ultimate policy leap on Thursday, launching a government bond-buying programme which will pump hundreds of billions of new money into a sagging Euro zone economy. On domestic front, investors will be getting some support with Finance Minister Arun Jaitley assuring that the government will keep up the pace on reforms but said he doesn’t want to build expectations in the run up to the Budget. Meanwhile, the Securities and Exchange Board of India (Sebi) through a board of directors meeting on Thursday eased its recently introduced delisting regulations. There will be some action in the textile sector stocks, as the Union Ministry of Textiles plans to set up an incubation centre at National Institute of Fashion Technology (NIFT), Bhubaneswar for promoting entrepreneurship in the apparel and garment sector. The stocks of oil marketing companies (OMCs) too may see some action as the losses incurred by OMCs on subsidised sale of domestic cooking gas or liquefied petroleum gas (LPG) have widened 14 per cent to Rs 34,941 crore in the first nine months of the current financial year.

There will be some important result announcements too, to keep the markets ticking. Atul, BEL, Coromandel, Edelweiss, Kolte Patil, Omax Auto, TCI Finance and Wabco India are among the many to report their numbers.

The US markets rallied in last session following ECB President Mario Draghi’s announcement of an expanded asset purchase program. The Asian markets have made mostly a positive start after ECB President unveiled an expanded stimulus plan. Optimism about the additional stimulus providing a boost to the European economy seemed to overshadow any concerns about potential risks to the national central banks.

Thursday’s session turned out to be a fabulous day of trade for the Indian equity markets, which scaled fresh highs for yet another session. Benchmark indices extended their previous session’s rally and hit fresh record high with Sensex and Nifty surpassing 29,000 and 8,750 levels respectively on sustained buying by funds and retail investors. Key gauges pared most of their early gains and entered into red terrain in noon deals for a brief period, but significant recovery in dying hour of trade helped markets to end at fresh all closing time high levels. Domestic sentiment was buoyed on buying by blue-chips, tracking a firm trend across the region and on optimism that the government will continue with the reform agenda. Sentiments also remained up-beat on report that the government may raise the limit on foreign holding of Indian corporate bonds as existing $51 billion cap could be exhausted given the surging demand for Indian fixed income securities. Some support also came after Finance Minister Arun Jaitley said India is back in the reckoning at the global centre-stage and the huge build-up in positive sentiments among investors should soon start converting into real investment flows on the ground. On the global front, European counters were trading cautiously in early deals ahead of the European Central Bank’s (ECB) policy meeting amid expectations it will announce a full-scale bond-buying program to save the euro zone economy. Back home, some support came from report that overseas investors bought Indian shares worth Rs 2,066 crore ($334.7 million) on January 21, 2015, extending their buying streak for the fifth straight session, provisional exchange data showed. Meanwhile, shares of real estate companies edged higher after Prime Minister Narendra Modi has directed all concerned departments to immediately finalise the programme and finalise the financing models for alternate sets of housing requirements with regard to the government’s Housing for All Mission. Finally, the BSE Sensex surged by 117.16 points or 0.41%, to 29006.02, while the CNX Nifty soared by 31.90 points or 0.37% to 8,761.40.