Markets to extend gains with a positive start

The Indian markets witnessed a rebound rally in last session with benchmarks posting their biggest gain in over two months, as investors resorted to bargain buying in beaten-down stocks led by surge in global markets. Today, the start is likely to be in green, though markets may consolidate in latter trade and some profit booking too may appear at higher levels, but the global cues are likely to keep supporting the markets. The banking stocks will keep buzzing after the Reserve Bank of India (RBI) relaxed provisioning rules against bad loans. The RBI said it would allow banks to set aside up to 50 per cent of floating provisions from 33 per cent earlier. Also, the credit rating agency Moody's has said that Indian government's efforts to revive the stranded gas-based power projects will benefit the banks as they have significant exposure to such plants. However, the telecom companies may come under some pressure, as the Moody’s has said that telecom companies that bid Rs1,09,784 crore to retain and enhance their spectrum holdings will have to bear higher costs and debt, reduce future expansion and gradually increase tariffs.

The US markets bounced back and rallied in last session, supported by some positive economic data and partly due to bargain hunting following last week's pullback. Pending home sales jumped to their highest level in twenty months, while personal income rose by slightly more than expected in the month of February. The Asian markets have made mostly a positive start with some of the indices heading for their best quarter in three years, as China moved to support economic growth. Comments from People’s Bank of China governor Zhou Xiaochuan generated optimism about additional stimulus.

Back home, boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying around two percentage points amid strong global cues. Sentiments remained up-beat since start as key bourses opened with decent gains and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,450 (Nifty) and 27,950 (Sensex) bastions as investors took to hefty across the board buying. Sentiments remained jubilant on reports that global rating agency, Fitch just right ahead of its annual sovereign rating scheduled for next month, in its report underscored that sustained fiscal consolidation, structural reforms and low inflation were positive for the country's ratings. The agency has allocated a ‘BBB-’ rating for the country with a stable outlook, which is the lowest investment grade rating. Some support also came in with reports that the government is looking at a slew of measures, including liberalizing FDI norms for NRIs and manufacturing firms to sell products through e-commerce portals. With an object to boost ‘Make in India’ campaign, the ministry would soon seek cabinet nod on permitting Indian manufactures to sell their goods to consumer through e-commerce portals. Global markets too supported the sentiment with European counters making a positive start, while the Asian markets rallied too. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Rally in banking counters too aided the sentiments after Reserve Bank of India (RBI) proposed to lower the ceiling on how much a bank can lend to a single corporate group, in a move to curb risks in the banking sector at a time when bad loans are on the rise. Finally, the BSE Sensex surged by 517.22 points or 1.88% to 27975.86, while the CNX Nifty soared by 150.90 points or 1.81% to 8,492.30.