Markets to extend the jubilation with a good start

The Indian markets sensed the relief first among the global peers and rallied over a percent and half in last session. Today, the start is likely to remain jubilant and the markets will extend the gains encouraged by the Prime Minister’s meeting with Indian industry, where he asked them to take risk and invest more as his government promised a broad range of steps including stepping up of investment in infrastructure and improving ease of doing business to attract global investment. Chief Economic Advisor Arvind Subramanian too has said that Indian economy will grow at the highest rate and also remain an attractive investment destination. Traders are also likely to get some support with Organisation for Economic Cooperation and Development (OECD) statement that India is expected to see “firming growth” while the outlook for China continues to deteriorate. Steel stocks are likely to see some action, as the government is likely to soon impose safeguard duty on imports of certain types of steel as it has found prima-facie evidence that surge in imports is hurting domestic producers. There will be some buzz in the telecom sector too, as the Union Cabinet is likely to take up spectrum trading guidelines for approval today.

The US markets rallied in last session coming out of a long weekend and the Dow posted its second biggest daily gain for the year, in reaction to strength among Chinese stocks, though traders are keeping an eye on Federal Reserve’s monetary policy announcement next week. The Asian markets have made a good start led by the Japanese market, which was up by over 5 percent in early trade, the biggest gain in 10 months. Traders in the region were drawing optimism that China will be able to stabilize its financial markets.

Back home, Tuesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over one and a half percent. Hectic buying activity which took place during second half of trade mainly drove the markets higher, with frontline gauges ending near intraday high levels, recapturing their crucial 25,300 (Sensex) and 7,650 (Nifty) bastions. After trading choppy in morning deals, sentiment took U-turn in second half of trade as market-participants opted to take positions in beaten down but fundamentally strong stocks. Sentiment turned up-beat with Prime Minister Narendra Modi’s brainstorming session on how India can manage global economic turbulence, including opportunities for Asia's third-largest economy in China's market and growth woes, where Prime Minister asked India Inc to increase risk-taking appetite and step up investments, while Industry body Assocham told the PM that policymakers needed to act fast to ‘bullet-proof’ India from the global headwinds and called for a deep cut in interest rates and new duties to stop dumping of Chinese products, such as steel. Appreciation in Indian rupee too supported the sentiments. The rupee firmed up during the trade and was trading higher by 20 paise at the time of equity markets closing to quote at 66.62 following sustained selling of the greenback by banks and exporters amid weakness of dollar overseas on the back of higher equities. Meanwhile, Moody’s Investors Service said India's current account deficit is likely to remain low supported by declining oil prices but a slow recovery in industrial output and investment would drag economic growth to 7% in the current fiscal. Positive opening in European counters too supported the sentiments, while the Asian Markets ended mostly in green. Back home, some support also came with Minister of State for Finance Jayant Sinha’s statement that the government has the fiscal space to be able to absorb additional financial burden on account of OROP, without having any impact of the fiscal deficit target, which is 3.9 percent. Finally, the BSE Sensex surged by 424.06 points or 1.70% to 25317.87, while the CNX Nifty soared by 129.45 points or 1.71% to 7688.25.