Markets to extend the gains of last week with a positive start

18 May 2015 Evaluate

The Indian markets moved higher in last session with continuously declining inflation boosting the demand for another rate cut from the RBI. Today, the start of the new week is likely to be in green and the markets will extend gains, as the global bond markets have started showing some signs of easing. Market will be getting some support with Finance Minister Arun Jaitley’s statement that making taxation more reasonable and improving ease of doing business will be among his top priorities going ahead. Meanwhile, finance ministry announced that it has contained the fiscal deficit at four per cent of GDP for 2014-15 at Rs 5,01,880 crore, which is even lower than the stiff 4.1 per cent target set in the Budget. Traders will be getting some encouragement with the Associated Chambers of Commerce and Industry of India (Assocham) awarding the Narendra Modi government seven marks on a scale of 10 for its performance over the past year. The industry body has lauded the government for improving the macroeconomic situation, financial inclusion, Swachch Bharat initiative, coal auction, and clearing difficult legislation in Parliament. There will be some buzz in the capital goods stocks, as the Heavy Industries Ministry has set up a task force to sketch out a road map for the country's capital goods sector.

The US markets made a mixed closing in last session; there were some weak economic data that kept the traders in a cautious mood. The Asian markets have made mostly a positive start, as weaker-than-expected economic data from US spurred bets the Federal Reserve won’t rush to raise interest rates. The Japanese market was trading with gains of around half a percent as yen slid against the US dollar.

Back home, Indian equity benchmarks ended the Friday’s session with a gain of around half a percent as investors remained hopeful of Reserve Bank of India (RBI) slashing the key policy rate to fuel investments and propel growth. Markets, after a cautious start, gained traction and traded mostly in the green terrain throughout the session with frontline gauges recapturing their crucial 27,300 (Sensex) and 8250 (Nifty) bastions. The sentiments got bolstered after the India Meteorological Department (IMD) forecasted that the southwest monsoon is likely to hit the Kerala coast on May 30, two days ahead of schedule, which bodes well for timely sowing of crops. Some support also came with an UN report, saying that Indian economy is likely to clock 8.1 percent growth in the current financial year, spurred by strong consumer spending amid low inflation, infrastructure projects and government’s reform measures. Finance Minister Arun Jaitley too has said that the economy was in a recovery mode with inflation and fiscal deficit under control and despondency giving way to a positive environment. On the global front, European markets made a firm opening, while Asian markets ended mixed with investors awaiting more US data for clarity. Back home, appreciation in Indian rupee too supported the sentiments. Some support also came with report that foreign direct investment (FDI) in India grew by about 40% Year-On-Year (Y-o-Y) to Rs 1.76 lakh crore in 2014-15 as compared to Rs 1.26 lakh crore in 2013-14. Rally in Rate sensitive counters like Auto and banking too aided the sentiments as sustained fall in consumer inflation prices has given boost to hopes of a rate-cut by Reserve Bank of India. Finally, the BSE Sensex surged by 117.94 points or 0.43% to 27324.00, while the CNX Nifty gained 38.15 points or 0.46% to 8,262.35.

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Markets to extend the gains of last week with a positive start

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