Markets to make a green start; RBI’s policy decision eyed

The Indian markets after remaining choppy in first half gained momentum to end with gains of around a percent in last session. Today, the start is likely to be in green though traders will be eyeing Reserve Bank of India’s (RBI) first bi-monthly monetary policy of the fiscal year 2016. The RBI has cut interest rate twice since January and is unlikely to further reduce it this time and will maintain status quo waiting for more cues on price trends. Meanwhile, Finance minister Arun Jaitley clarifying the tax notice sent to foreign investors said that India didn’t aspire to be a tax haven and every tax demand could not be equated with an act of “tax terrorism” by the government. Also, there will be some cautiousness with domestic ratings agency Crisil saying that credit quality improvement will continue to be gradual in FY 2016 as well, but underlined that large companies are a cause of worry. Banking stocks will continue to remain in action with RBI giving banks more time to restructure their troubled loans. There will be some somberness in the power sector stocks, as the government has withdrew duty benefits extended to operation and maintenance of power plants set up by developers within special economic zones (SEZs).

The US markets despite a slow start ended higher in last session on expectation that the Federal Reserve could hold off longer on raising US interest rates after weak monthly jobs report. The Asian markets have made an all green start with some of the indices surging by over a percent and the Shanghai Composite is trading at its highest levels since March 2008, while the Japanese market too inched higher as the yen weakened.

Back home, extending their previous session northward journey, Indian equity benchmarks ended the session with a gain of around a percentage point. Buying activity which took place during second half of trade mainly drove the markets higher with Sensex and Nifty recapturing their crucial 28,500 and 8,650 levels respectively. Markets traded near their neutral lines in first half as investors remained on sidelines expecting the central bank to maintain status quo on key rates at its policy meet tomorrow. However, frontline gauges gained momentum in the latter half of the trading session to end nearly a percent higher amid renewed buying interest in defensives led by Sun Pharmaceutical. Some support also came with report that, foreign institutional investors were net buyers in equities to the tune of Rs 210 crore on Wednesday. Meanwhile, investors shrugged off weak service Purchasing Managers' Index (PMI) data. On the macro-front, growth in India's pivotal services industry lost some momentum in March as input prices rose at the fastest pace in nearly a year with HSBC Services PMI easing to 53.0 in March from February’s eight-month high of 53.9. Nevertheless, positive global set-up also aided the sentiment. Global cues too remained supportive with Asian shares ending mostly higher. 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. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 62.20 per dollar at the time of equity market closing against the previous close of 62.49 on the Interbank Foreign Exchange. Meanwhile, buying in healthcare counter too aided the sentiments led by over 8% surge in Sun Pharma following the completion of the merger of Ranbaxy Laboratories with itself. Stocks related to Consumer Durables counter remained on buyers’ radar on expectations that the government will move the GST Constitutional Amendment Bill in the Lok Sabha soon. Finally, the BSE Sensex soared by 244.32 points or 0.86% to 28504.46, while the CNX Nifty surged by 73.65 points or 0.86% to 8,659.90.