Markets to consolidate with a cautious start after big gains

The Indian markets went for humongous rally in last session, with benchmarks posting gains of around one and half a percent on good global cues and some upbeat earnings announcements. Today, the start is likely to be flat-to-cautious on weak regional cues, though traders will be eyeing the manufacturing index data or PMI later in the day after the growth in the eight core sectors slowed to 3 per cent in June, after a six-month high of 4.4 per cent in May, but the metal pack is likely to remain under pressure on slowing Chinese economy. Trade is also likely to remain cautious eyeing the RBI’s monetary policy announcement slated tomorrow. However, there will be some support with Minister of State for Finance Jayant Sinha’s statement that India is aiming to be among the top 30 countries in the world in terms of ease of doing business from the present 142nd position among 189 nations. The sugar stocks are likely to see some action, as Prime Minister Narendra Modi has favoured raising sugar exports to liquidate surplus stocks because of low domestic demand that has led to a huge cane arrears of over Rs 14,000 crore to farmers. The textile stocks too will be buzzing, as representatives from a Ficci panel have met Finance Minister Arun Jaitley and pitched increase in allocation of funds under Technology Upgradation Fund Scheme and interest subvention for exporters. The auto companies will be reacting to their monthly sales numbers, with most of the car companies reporting good numbers backed by better than expected monsoons, reduction in fuel prices and a slew of new launches. There will be lots of result announcements too, to keep the markets buzzing.

The US markets ended modestly lower in the last session, though there was some recovery in latter part of the trade but traders kept analyzing the outlook for interest rates following Wednesday’s Federal Reserve announcement. The Asian markets have made mostly a soft start on signs of a deepening slowdown in China’s economy, after nation’s manufacturing slid to a five-month low in July.

Back home, boisterous benchmarks showcased an enthusiastic performance on Friday, by rallying around one and a half percentage points amid strong global cues. 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 hunt for fundamentally strong stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,500 (Nifty) and 28,000 (Sensex) bastions as investors took to hefty across the board buying. Sentiments remained jubilant with the government notifying composite cap in the FDI policy, allowing up to 49 per cent foreign portfolio investment (FPI) through the automatic route in most sectors, including brownfield pharmaceuticals, single-brand retail, insurance, pension and facsimile editions of foreign newspapers. The hopes for a rate cut have been increased ahead of the Reserve bank of India (RBI) monetary policy due the decline in crude prices, advancement of monsoon and neutral stance by the Federal Reserve. Buying intensified after European counters made a firm start, while 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. Better-than-expected earnings announcement from select blue-chip companies too aided sentiments. Shares of public sector bank remained on buyers’ radar on news of recapitalization, as the government sought approval for an additional allotment of Rs 12,110 crore from the Parliament to be used for the recapitalisation of public sector banks. Finally, the BSE Sensex surged by 409.21 points or 1.48% to 28114.56, while the CNX Nifty soared by 111.05 points or 1.32% to 8532.85.