Markets to get a strong start on RBI rate cuts

Indian markets despite some volatility managed another positive close in last session riding on the Budget euphoria. Today, the start is likely to be strong and traders will be rejoicing the surprise rate cut by the RBI. The central bank has reduced Repo rate by 0.25% to 7.50%. Some profit booking too can be expected taking cues from the global markets. However, Nifty hitting fresh highs too cannot be denied. There will be some concern with Chief Economic Adviser Arvind Subramanian’s statement that the ambitious 8.1-8.5 percent economic growth projected for the next fiscal in Finance Minister Arun Jaitley's Budget is more like a "statistical and not a real number." The telecom stocks will be in action with the bidding for spectrum airways starting today and eight telecom companies including Bharti Airtel, Vodafone, Idea Cellular, Reliance Communications and Reliance Jio are expected to bid aggressively and the government is expected to garner around Rs 82,000 crore to Rs 1 lakh crore. The metal and mining stocks too will keep buzzing with the Minister for Coal, Power and Renewable Energy Piyush Goyal stating that the next phase of auction of coal mines will begin shortly.

The US markets ended lower in last session, mainly on profit booking, with the losses on the day, the Nasdaq dipped back below the 5,000 level. Sentiments were also weighed down by news of disappointing auto sales from Ford, General Motors and Chrysler, hurt by the harsh winter weather. The Asian markets have made mostly a soft start, led by the Japanese market which is down by over half a percent in early deals as the yen held gains against the dollar.

Back home, extending their winning streak to fourth straight day, Indian equity benchmarks ended the Tuesday’s session at their all time closing high levels with Sensex and Nifty ending just shy of their crucial 29,600 and 9,000 levels respectively as sentiments remained up-beat on sustained inflow of foreign capital amid growth-oriented and market-friendly measures in the Budget. Markets traded choppy in early deals on the back of weak economic data, as after lower manufacturing numbers, growth in eight core industries has slowed down to 1.8% in January, its lowest in last 13 months, due to negative expansion in crude oil and natural gas. Also, the global rating agency S&P ruled out a rating upgrade for India within a year while Fitch said the government's fiscal consolidation strategy spelt out in Budget is “less aspiring” than in the past. However, markets gained momentum in second half of the session with Nifty touching record high level of 9,000 on persistent buying, mainly in healthcare, consumer durables IT and energy stocks with Reliance contributing the most to the gains after LIC increased its stake in the company. Sentiment also remained upbeat on hopes the government’s move to make no distinction between foreign direct investment and foreign portfolio investment would raise India’s weight in MSCI indexes. Moreover, traders await clarity on the central bank’s stance on rate cuts after formally adopting inflation targeting and the government pushed fiscal deficit target by a year to focus on infrastructure spending. Global cues too remained supportive with European counters making a firm start, while Asian markets too ended higher. Back home, stocks related to infra space continued to edged higher for second straight day with the announcement of different measures in the budget, there is proposal to set up 5 ultra mega power projects, each of 4000MW and Tax-free bonds for projects in rail road and irrigation. Shares of insurance companies, like Reliance Capital, Religare Enterprises, Bajaj Finserv, HDFC, Max India and Aditya Birla Nuvo edged higher on reports of government introducing Insurance Bill in Lok Sabha. The Insurance Bill, which intends to raise foreign investment in the insurance sector to 49% from 26%, will replace the Ordinance issued last year. Finally, the BSE Sensex surged by 134.59 points or 0.46% to 29593.73, while the CNX Nifty soared by 39.50 points or 0.44% to 8,996.25.