Markets likely to extend gains with a positive start

The Indian markets bounced back from their slew of declines in last session, taking cues from regional peers and report of delay in inclusion of Chinese A shares in MSCI index. Today, the start is likely to remain positive and the markets will extend their gains tracking the spurt in global equity markets. Traders’ sentiments are likely to remain bullish with the release of the latest Global Economic Prospects (GEP) report of World Bank which has said that leading the World Bank's growth chart of major economies, India with an expected growth rate of 7.5 percent this year is set to surpass China. There will be added encouragement with the current account deficit numbers which came post market hours on Wednesday. Reserve Bank of India has reported that the government’s current account deficit narrowed to $1.3 billion, or 0.2 per cent of gross domestic product, in the January-March quarter from $8.3 billion, or 1.6 per cent of GDP in the previous quarter. In other positive development from the economy front, indirect tax collection surged by 39.2 percent in April-May, with excise showing a smart rise reflecting pick up in manufacturing. The aviation stocks will be in action on reports that the central government expects to finalise the long pending new aviation policy and also the much debated revised international flying norms for domestic carriers within a month.

The US markets went for a rally in last session supported by bargain hunting at lower levels, offsetting the pullback seen over the past couple of sessions. Traders also got some support with the gains in European markets, which rose on hopes of resolution to Greece crisis. The Asian markets have made mostly a positive start; extending their gains for a second day amid optimism Greece will forge a debt deal.

Back home, snapping six days losing streak, Indian equity benchmarks staged an enthusiastic performance on Wednesday, by rallying over a percentage point and breaking lots of psychological levels in their northward journey. Sentiments remained positive since beginning of the trade 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 but oversold stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,100 (Nifty) and 26,800 (Sensex) bastions as investors took to hefty across the board buying. Sentiments remained up-beat as US index provider MSCI has deferred the inclusion of China's A stocks to its benchmark indices, rather choosing to sort out regulatory issues, which triggered buying by foreign funds. MSCI has told China it must further liberalise its capital markets before it will include Chinese domestic shares in one of its global benchmarks, in a setback to Beijing's efforts to promote its currency and attract foreign capital. Some support also came with World Bank’s report that India has figured in top five emerging economies for highest investment commitments despite a drop in investment commitments of USD 6.2 billion last year. According to World Bank, the five sectors in which India has still topped are private sector, infrastructure sectors energy, transport and water. On the global front, European markets after a cautious start turned higher, while Asian markets ended mixed. 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. Appreciation in Indian rupee also supported the sentiments. Finally, the BSE Sensex surged by 359.25 points or 1.36% to 26840.50, while the CNX Nifty soared by 102.05 points or 1.27% to 8,124.45.