New series to get a positive start on supportive global cues

The Indian markets surged in last session of the August series, though it was a dismal series but the last day’s gains managed to prune some losses otherwise the picture could have been worse. Today, the start of the new series is likely to be in green amid positive global cues. Traders will continue to be taking encouragement with the government’s announcement of the ambitious Smart City project, which is hoped to attract investment to boost the economy. Government has announced Rs 48,000 crore for development of 100 Smart cities out of which 98 names were declared and rest two will be nominated in due course. Meanwhile, Finance Minister Arun Jaitley has said that India, with 8-9 percent growth rate, can replace China as the driver of world economy. There may be some profit taking at the higher levels and there will be some cautiousness too, as Reserve Bank of India Governor Raghuram Rajan has said that the central bank will continue its focus on taming inflation, speeding up resolution of distressed projects and ensuring enough capital for banks through balance sheet clean-up. There will be some buzz in the power sector stocks, as the NITI Aayog will bring out a new integrated energy policy -- as was introduced by its predecessor the erstwhile Planning Commission -- which called for decontrolling of energy prices.

The US markets extended the rally mood with gains of over two percent after Chinese stocks rallied and generated some positive sentiment. Traders also reacted to some positive US economic data, including a report showing much stronger than previously estimated economic growth in the second quarter. The Asian markets have made an all green start taking cues from the US market gains and the China’s yuan advanced the most since April after the central bank boosted the currency’s reference rate in the biggest increase in five month.

Back home, Indian equity benchmarks staged an enthusiastic performance on August F&O expiry day, by rallying over two percentage points and breaking lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade 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 but oversold stocks. Sentiments remained up-beat on report of India Ratings that the government can spend an additional Rs 37,200 crore more this fiscal year in infra investments or bank recapitalisation and still not miss the 3.9 percent fiscal deficit target, attributing the surplus to the higher indirect tax collections, which till July rose a healthy 39 percent and a massive decline in crude prices. Short-covering by market participants owing to expiry of August month F&O contracts, too aided the sentiments. Traders also remained encouraged after Minister of Urban Development Venkaiah Naidu announced the list where government plans to spend over Rs 3 lakh crore over the next 5-6 years to recast urban cities. Of the 98 smart cities, 24 are business and industry centres, 18 are cultural and tourist centres & 3 are education and health care hub. Government would be releasing Rs 2 crore for each of the 98 proposed smart cities. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 65.99 per dollar at the time of equity market closing against the Wednesday’s close of 66.13 on the Interbank Foreign Exchange.  Buying got intensified after European markets made a strong start, while all the Asian markets ended in green. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle near intraday high levels with Sensex surpassing its crucial 26,200 bastion, while Nifty ended near its crucial 7,950 mark. Finally, the BSE Sensex surged by 516.53 points or 2.01 % to 26231.19, while the CNX Nifty gained 157.10 points or 2.02 % to 7948.95.