The Indian markets extended their gains for the second straight session on MET department’s forecast of a timely monsoon which raised hopes the Reserve Bank of India would lower interest rates in June. Today, the start is likely to be in green and the markets will extend their positive momentum for yet another day. Marketmen will be getting some support with SBI’s Monthly Composite Index, a leading indicator for manufacturing activity in Indian Economy, inching up from 46.8 in April 2015 to 53.8 in May 2015, however it has cautioned that going ahead “weak demand conditions” may persist that could have a negative impact on the industrial output numbers. Meanwhile, Finance Ministry is expecting a rating upgrade by credit agencies by the year-end on the back of policy initiatives, moderating inflation and improvement in the fiscal position of the government. The infra stocks will be in action as the Commerce Ministry will take up 22 proposals of SEZ developers that have approached it to surrender their tax free zones. There will be some buzz in the sugar stocks on report that India’s sugar production rose 16% up to mid-May in the marketing year through September, hitting an eight-year high and breaching a food ministry forecast for 2014-15.
The US markets ended modestly higher in last session with the Dow and the S&P 500 reaching new record closing highs, on views the Federal Reserve will hold off on raising interest rates, although the dollar rebounded from four-month lows on Monday and traders largely overlooked the report showing an unexpected drop in homebuilder confidence in the month of May. The Asian markets have made mostly a positive start tailing the positive global cues; Japanese shares were boosted by weakening yen.
Back home, Monday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over one percentage point on anticipation that Reserve Bank of India (RBI) may slash the key policy rate in the upcoming monetary policy review on June 2, 2015. Further, well-timed monsoon forecast and slowdown in foreign funds outflows lifted the trading sentiments. Sentiments remained up-beat since start as key bourses opened with decent gap on up-side 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 their hunt for fundamentally strong stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,350 (Nifty) and 27,350 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got bolstered 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. Some encouragement also came 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. Buying intensified after European counters made a firm opening, while Asian markets too ended mostly in the green terrain. 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. Meanwhile, oil marketing companies such as Bharat Petroleum Corporation (BPCL), Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation (HPCL) edged higher on the back of fuel price hike. These three companies announced Rs 3.13-a-litre increase in the retail price of petrol and Rs 2.71-a-litre rise in diesel prices with effect from Friday midnight to align the de-regulated domestic prices with the international rates. Finally, the BSE Sensex surged by 363.30 points or 1.33% to 27687.30, while the CNX Nifty soared by 111.30 points or 1.35% to 8,373.65.
