Markets to make a positive start on supportive global cues

The Indian markets surged in last session, extending their gaining streak to the new week. Today, the start is likely to remain in green on positive global cues after European leaders gave Greek Prime Minister Alexis Tsipras’s government 48 hours to make the final push needed to satisfy creditors and end a five-month standoff. Also, as the Finance Minister Arun Jaitley has said the credibility of Indian economy has been partly restored and the momentum must be sustained over the next two years to win over and provide comfort to world investors. However, there will be some cautiousness in the markets too, as the global ratings agency Fitch has said that though the government's reform initiatives have unlocked Indian “economy's dynamism” but weak public finances continue to remain a strain on any rating upgrade. The PSU banking stocks will be in action, as the Finance Secretary Rajiv Mehrishi has said that the Indian government intends to provide $ 9 billion (about Rs 57,000 crore) to public sector banks towards recapitalisation over the next two fiscal to meet global risk norms and for growth. There will be some buzz in the pharma sector, as the Chemicals and Fertiliser Minister Ananth Kumar has said that to enable a single-window clearance system in pharmaceuticals sector, the government will set up a high-level committee next week to work out the modalities for the same.

The US markets ended with good gains in last session, recovering the losses suffered on Friday, with Nasdaq finishing the session at a new record closing high. There was optimism that Greece will finally reach an agreement with its international creditors. The Asian markets extending their rally mood have mostly made a positive start. Chinese market resuming after a long weekend was trading with marginal gains, with a preliminary gauge of factory activity showing a smaller-than-estimated contraction.

Back home, boisterous benchmarks once again showcased an enthusiastic performance, by rallying over one and a half percentage points on Monday, as investors snapped up risky assets on optimism that Greece and its international creditors will strike a last-minute deal that will see Athens avert default. 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, as investors continued their hunt for fundamentally strong stocks. Frontline indices not only ended near intraday highs but also extended their rally for seventh straight session, settling comfortably above their crucial 8,350 (Nifty) and 27,700 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got bolstered with Finance Minister Arun Jaitley’s statement, who on the basis of policy changes along with a good monsoon said that the path to 10 percent growth in Indian economy is not impossible. Foreign investors too got some respite as he terming the controversial retrospective taxation regime a “legacy issue”, has assured US investors that the government does not intend to legislate retrospectively and is looking to put a “quietus” to the matter. Some support also came on reports that the foreign direct investment (FDI) inflows into India surged 112% in April to $3.6 billion from $1.7 billion in the year-ago period and was up 71% over the inflows in the previous month. Meanwhile, the southwest monsoon rains have been 11 per cent above normal so far in June, stoking hopes the Reserve Bank of India will cut rates in October than in 2016 as anticipated earlier after delivering three cuts of 25 basis points each in 2015 so far. Global cues too remained supportive with European markets making a thunderous start and Asian markets ending mostly in green. 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 too supported the sentiments. Finally, the BSE Sensex surged by 414.04 points or 1.52% to 27730.21, while the CNX Nifty soared by 128.15 points or 1.56% to 8353.10.