Markets to make a cautious start of the new series

The Indian markets bounced back in the second half of last session, supported by short covering ahead of the F&O series expiry and posted gains of over half a percent. Today, the start of the new series is likely to be a bit cautious and the markets may consolidate eyeing the global markets and development in Greece. Also, there will be some concern, with the Reserve Bank of India (RBI) Governor Raghuram Rajan warning of 2013 rupee plunge repeat. He added that the currency needs to reduce its inefficiencies if it wants to insulate itself from the possible tightening by the US Federal Reserve. However, traders will be getting some support, with Minister of State for Finance Jayant Sinha stating that the 75 basis points rate cut by the Reserve Bank since January will help boost growth along with structural reforms and thrust on infrastructure investments by the government. There will be some buzz in the media stocks on report that the government is discussing a proposal for increasing FDI limit in the media sector from the current 26 per cent to attract foreign investments. On the same time there will be some somberness in aviation stocks on hint of Civil Aviation Ministry that mechanisms would be put in place to curb predatory pricing ways of airlines.

The US markets ended lower in last session, reversing their early gains with Nasdaq pulling back further off Tuesday’s record closing high. Traders amid the lingering Greece concern overlooked good economic report from the Commerce Department showing a bigger than expected increase in personal spending in May. The Asian markets have made mostly a lower start, ahead of last-ditch talks at the weekend between Greece and its creditors. The Chinese market has plunged by around two percent in the early deals.

Back home, resuming their northward journey, Indian equity benchmarks ended the June F&O series expiry day on a firm note with frontline gauges ending near their crucial 28,900 (Nifty) and 8,400 (Nifty) levels. Sentiments remained up-beat as above normal monsoon rains, stoked hopes that central bank will cut rates in October than in 2016, as anticipated earlier after delivering three cuts of 25 basis points each in 2015 so far. Markets though traded cautiously in early deals on concern that Greece's creditors have rejected the debt repayment proposals, but extended its northward march in later part of the day’s trade after Prime Minister Narendra Modi launched smart cities, housing for all and urban rejuvenation schemes for Asia's third largest economy. Some support also came with an UNCTAD report that FDI inflows in India rose 22 percent to $34 billion in 2014, and the upward trend is likely to continue against the backdrop of a push to manufacturing. The UN report also said that global foreign direct investment is expected to rebound in 2015 after falling 16 per cent last year due to a fragile world economy and political and military crises. Also, making a robust pitch for investments in India, Finance Minister Arun Jaitley requested lengthy-time period US buyers to start out investing without any delay as India’s progress story is on a agency footing and all excellent points are underneath the federal government’s lively consideration. On the global front, European markets turned negative in early deals, while Asian markets too ended mostly lower. Back home, some support came after the labour minister said the state social security fund would start investing in equity markets next month, as part of a reform drive aimed at boosting the economy. Finally, the BSE Sensex surged by 166.30 points or 0.60% to 27895.97, while the CNX Nifty gained 37.15 points or 0.44% to 8398.00.