Markets to make another green start on supportive global cues

The Indian markets went for a huge rally in last session and the benchmarks hit their three months high on Greek development and lower oil prices. Today, the start is likely to remain in green on sanguine global cues and also due to approval of composite cap for all kinds of overseas inflows including through FDI, FII and NRI routes. However, there will be some cautiousness too, as though the Asian Development Bank (ADB) retained its India GDP growth projection for 2015-16 at 7.8 percent, it cautioned that delay in reforms relating to land acquisition and GST could hamper growth. The power sector is likely to see some action, as the Cabinet Committee on Economic Affairs (CCEA) has approved the creation of a transmission system covering seven states at an estimated cost of Rs 8,548.68 crore. There will be some buzz in the oil stocks, on report that India’s annual fuel demand rose 2.83 percent in June but it slowed compared to the previous month as better monsoon and improved power supply crimped demand for fuels. The banking stocks too will be in action, as the Reserve Bank of India has allowed banks to factor export receivables on a non-recourse basis, so as to enable exporters to improve their cash flow and meet their working capital requirements.

The US markets ended higher in last session, recovering all the losses of the last session and tech-heavy Nasdaq reaching a new record closing high. Markets reacted positively to the Greek parliament’s approval to the tough austerity measures needed to secure a fresh bailout and also to some upbeat earnings. The Asian markets have made mostly a positive start and the Chinese markets too have rebounded taking cues from the US markets. Though, the Japanese market was swinging between gains and losses with decline in oil explorers.

Back home, boisterous benchmarks once again showcased an enthusiastic performance, by rallying around a percentage point after Greek parliament approved the austerity reforms. Sentiments remained up-beat since start as key bourses opened with decent gains 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 extended their rally for second straight session but also ended at their highest level since April 17, recapturing their crucial 8,600 (Nifty) and 28,400 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got bolstered after India’s trade deficit narrowed to 10.8 billion in June as compared to 11.7 billion in same month previous year. The trade deficit for April-June, 2015-16 was estimated at $ 32225.66 million which was lower than the deficit of $33083.93 million during April-June, 2014-15. However, country’s exports contracted for the seventh straight month by 15.82 percent to $22.2 billion on account of slump in global demand. Meanwhile, the Cabinet cleared a proposal to merge the limits of foreign direct and portfolio investments into composite caps to make foreign investment regime easier. The department of industrial policy and promotion (DIPP) had prepared a Cabinet note proposing a combined cap in most sectors where foreign direct investment (FDI) is allowed or where foreign institutional investors (FII) have a separate limit. Global cues too remained supportive with European markets trading higher in early deals, while the Asian markets ended 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. Rally in rate sensitive stocks too aided the sentiments on hopes of a rate cut on the back of narrowing trade deficit data. Finally, the BSE Sensex surged by 247.83 points or 0.88% to 28446.12, while the CNX Nifty soared by 84.25 points or 0.99% to 8608.05.