Markets to make a cautious but positive start

The Indian markets extended their gains in last session and supported by a last hour surprise spurt ended with gains of over a quarter percent, though the trade remained cautious for most part of the day on global concern but value buying at lower levels helped the markets make another green close. Today, the start is likely to be a bit cautious though in green and traders will be eyeing the announcement from the US FOMC meeting, which could be a big cue for the global markets. Traders will be getting some support with Asian Development Bank president Takehiko Nakao statement that the bank is looking to increase exposure in India, especially in infrastructure, skill development and urban services, and proposes to increase lending to the country by almost half to $12 billion by 2018. On the other hand some somberness can be seen in the textile stocks, as the industry body TEXPROCIL has said that removal of benefits on exports to African countries in the new foreign trade policy will affect shipments of value added products like cotton dyed and printed fabrics.   

The US markets ended higher in last session, offsetting the notable losses posted in the two previous sessions, mostly on bargain hunting and waiting for Federal Reserve's highly anticipated monetary policy announcement on Wednesday. The Asian markets have made a mixed start, with some indices rising for the first time in the week. Hang Seng was trading in green as Hong Kong lawmakers started debating a China-backed plan Wednesday for the first popular election of the chief executive, set for 2017.

Back home, Tuesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of around half a percent. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels. Earlier, markets made a weak start and traded in tight band for most part of the day’s trade as weakness in the global equities on fears over Greece debt defaulting coupled with a depreciating rupee kept investors edgy. Investors also remained cautious with mixed trade data, while the Indian trade deficit narrowed to $10.4 billion in May against $11.2 billion in the same month a year ago, but declining for the sixth straight month the country's merchandise exports shrank 20.2 percent to $22.35 billion in May, dragged down by a slump in global demand. The indices even went on to test important psychological 26,400 (Sensex) and 7,950 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon. On the global front, European shares hit near four-month low, while Asian markets too ended lower as traders remained cautious ahead of the start of a two-day meeting of the Federal Reserve. Back home, sentiments remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 604.86 crore yesterday as per provisional data released by the stock exchanges. Depreciation in Indian rupee too dampened the sentiments. However, a smart rally in the banking stocks aided the sentiments on reports that the government will infuse fresh capital in the government-run banks this year to bolster risk buffers and credit growth. Shares of oil marketing companies (OMCs) edged higher after these announcing Rs 0.64 a litre increase in petrol prices to align the domestic rates with global prices. Finally, the BSE Sensex surged by 99.96 points or 0.38% to 26686.51, while the CNX Nifty gained 33.40 points or 0.42% to 8047.30.