Markets to make a soft start tailing weak global cues

The Indian markets continuing their bullish trend ended in green in last session, on some upbeat earnings and fund inflows. Today, the start is likely to be a bit soft and markets will be influenced by the global cues ahead of US payrolls report that may add to evidence the economy is robust enough to embolden the Fed to raise rates. There will be some buzz in the market and especially the PSU banks, as the global rating agency Moody’s has said that government's decision to infuse Rs 70,000 crore in PSU banks is a credit positive but 'not a game changer' as the amount is relatively small and they will have to access capital from markets to meet their needs. Marketmen are also likely to get some support with Labour Minister Bandaru Dattatreya's statement that pension fund could invest more into equities in the next fiscal year starting April by raising the current limit set at 5 per cent of total investable assets. The Aviation stocks are likely to react positively to the report of International Air Transport Association that India has become the fastest growing aviation market in the world in June, when the country registered a year-on-year growth of 16.3% in domestic air passenger traffic. There will be some buzz in the PSU stocks too, as the Minister of State for Coal and Power Piyush Goyal has said that the government has approved proposals for divesting 11.36 per cent stake in NTPC and 5 per cent stake in NHPC.

The US markets extending their decline ended lower in last session, with the Dow closing lower for the sixth consecutive session and traders remaining cautious ahead of the monthly jobs data due on Friday. Most of the Asian markets have made a soft start, though the Chinese markets bucking the trends have rallied, as speculation grew the government will take more measures to stem a market rout.

Back home, Thursday’s session turned out to be a good day of trade for the Indian equity markets, where frontline gauges garnered gains of around quarter of a percent. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending just shy of their crucial 28,300 (Sensex) and 8,600 (Nifty) bastions. Earlier, markets traded choppy as traders took cautious stance on bets that the Federal Reserve will boost interest rates as soon as next month. However, sentiments turned up-beat in second half of trade with RBI Governor Raghuram Rajan’s statement that the central bank will cut interest rate provided it feels confident that inflation will remain below 6 percent even after the reduction. Sentiments also got a strong support with retirement fund manager Employees Provident Fund Organisation (EPFO) entering the stock market through exchange-traded funds (ETFs). The retirement fund manager will invest up to 5% or Rs 5,000 crore and Rs 6,000 crore of its incremental corpus in ETFs between 6 August and 31 March 2016. Some support also came with government’s proposals for big investments of Rs 30,552.45 crore, pertaining to sectors such as pharmaceuticals, information & broadcasting, insurance, non-banking finance companies and private banks. On the global front, European counters traded choppy in early deals, while Asian markets ended in red. Back home, appreciation in Indian rupee aided sentiments, while stocks related to capital goods counters remained on buyers’ radar after robust results from Siemens. The company reported a 13-fold jump in standalone net profit at Rs 168 crore for the quarter ended June 30, 2015 (Q3). Finally, the BSE Sensex gained 75.05 points or 0.27% to 28298.13, while the CNX Nifty added 20.70 points or 0.24% to 8588.65.