Markets to get a flat-to-positive start on mixed global cues

The Indian markets witnessed a very volatile trade in last session but managed to end in green supported by late hour buying in bluchips. Today, the start is likely to be mildly in green. Traders will be getting some support with a survey sponsored by RBI projecting the economic growth rate at 7.9 percent for the current fiscal, up from 7.5 percent in 2014-15. The forecasters expect real GVA to increase by 7.5 percent in 2014-15. Also, NITI Aayog vice-chairman Arvind Panagariya has said that the nothing has-changed-on the-ground sentiment remains though the economy is showing signs of turnaround. Panagariya also said that it will take some time before major results show up as there is a new government which came with a lot of promises. The real estate sector stocks will keep buzzing, as the Union Cabinet has approved amendments to the Real Estate (Regulation and Development) Bill, 2013. The bill with amended provisions of covering commercial projects apart from residential real estate would be moved in Parliament in second half of the budget session. Infra stocks too will be in action after the government approved three highway projects worth Rs 9,500 crore in Tamil Nadu and Uttar Pradesh.

The US markets made a flat closing with a negative bias in last session, although markets remained in green for most part of the day as traders expressed continued optimism about the outlook for interest rates, but there was some cautiousness ahead of the release of minutes of the latest Federal Reserve meeting on Wednesday. The Asian markets have made a mixed start, though some of the indices have moved toward a nine-month high, led by Hong Kong shares, and the dollar weakened before the Bank of Japan decides policy.

Back home, buying activity which took place during last leg of trade mainly drove the markets higher and key domestic benchmarks managed to keep their head above water on Tuesday. Earlier, markets after a positive start entered into red tertian as Reserve Bank of India (RBI) in its first bi-monthly monetary policy statement for 2015-16 kept the repo rate unchanged at 7.5 per cent. Also, the cash reserve ratio (CRR) was unchanged at 4 per cent. Sentiments also remained dampened 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. 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. However, dramatic recovery witnessed in late trade as traders opted to buy beaten down but fundamental strong stocks. Some support came with reports that Reserve Bank has estimated FY16 GDP at 7.8 percent, 30 basis points more than the CSO expectation. Meanwhile, RBI Governor, Raghuram Rajan said there is more room to cut interest rates but will watch out for data, adding that banks over time will be forced to match markets and bring down rates. The governor also said that US Fed’s policy changes will not constrain RBI's move on rates. Positive opening in European counter too supported the sentiments, while the Asian markets rallied on Tuesday. Back home, some support came with report that foreign institutional investors were net buyers in equities worth Rs 937 crore on Monday, as per provisional stock exchange data. Meanwhile, buying in Auto and metal counters in late trade aided the sentiments. On the flip side, financial shares ended mixed on concerns of slowdown in incremental credit growth amid high interest rates. Additionally, shares of housing finance and realty shares remained under pressure on worries that home loan growth could take a hit as new home buyers would refrain from housing finance to fund new home purchases. Finally, the BSE Sensex gained 12.13 points or 0.04% to 28516.59, while the CNX Nifty added 0.40 points to 8,660.30.