Markets to extend the jubilation with a positive start

The Indian markets went for a rally in last session on optimism that Fed’s not so immediate rate hike will restrict foreign fund outflows, while there were some government announcements too that helped the markets move higher. Today, the start is likely to be in green and the Nifty can reclaim its 8200 mark in the very early deals on sanguine global cues. Traders will be getting some support with Finance Minister Arun Jaitley’s statement that a Parliamentary panel will in the second week of July submit its report on the Goods and Services Tax Bill. The Minister has also told the business community that the government will try to get the three supporting legislations for the implementation of the comprehensive indirect tax law in the subsequent sessions of Parliament. Finance Minister has also assured global investors that the Narendra Modi government is making efforts to allay their concerns over expediting reforms, the tax regime and policy stability. Traders’ sentiment is also likely to get a boost with IMD stating that monsoon is expected to be normal in June boosting sowing of kharif crops but there are concerns about pick up in rainfall in the next month.

The US markets rallied in last session with Nasdaq reaching new record high, as traders continued reacting positively to the Federal Reserve’s monetary policy announcement. Also, the tame consumer price inflation data too bolstered the sentiments. Consumer price index climbed by 0.4 percent in May after inching up by 0.1 percent in April. The Asian markets have made mostly a positive start, though Chinese market with a lower start was heading for its worst weekly decline since the global financial crisis.

Back home, boisterous benchmarks once again showcased an enthusiastic performance, by rallying over a percentage point on Thursday. Sentiments remained up-beat since start as key bourses opened with huge 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. Investors continued their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for fifth straight session but also ended near intraday highs, settling comfortably above their crucial 8,150 (Nifty) and 27,100 (Sensex) bastions, as investors took to hefty across the board buying. Sentiments remained up-beat as the US Federal Reserve in its open market committee meeting on Wednesday left the key rate unchanged at 0-0.25 per cent. On the domestic front, lots of government announcements too encouraged the traders for putting bets on the Indian growth story. Government gave its approval for the launch of the ‘Housing for All by 2022’ scheme. The Union Cabinet chaired by Prime Minister Narendra Modi accepted the recommendations of an Inter-Ministerial Committee to increase interest subvention to 6.50 per cent on housing loans to beneficiaries belonging to economic weaker section (EWS) including slum-dwellers and low income groups (LIGs). On the same time moving a step further in implementation of GST by April 1, 2016, the Finance Ministry set up two committees to suggest tax rates and look into IT preparedness for the new indirect tax regime. On the global front, European counters traded in red in early deals, while Asian markets too ended mostly in red. 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. Advancement of Monsoons and favorable macroeconomic parameters coupled with a strengthened rupee further lifted the sentiments. Meanwhile, steel stocks remained in action after the government, in a much needed relief for domestic producers increased the basic customs duty (BCD) on certain long and flat steel products by 2.5 percent. Finally, the BSE Sensex surged by 283.17 points or 1.06% to 27115.83, while the CNX Nifty gained 83.05 points or 1.03% to 8174.60.