Markets to give up some of the gains with a soft start

The Indian markets ended with good gains in last session, with traders hoping an ensuing rate cut from the RBI. Today, the start of another holiday truncated week is likely to be soft-to-cautious tailing weak cues of global markets. There will be some volatility too being the F&O expiry week for September series. Though, markets will be getting some support with Union Finance Minister Arun Jaitley’s statement that despite a global slowdown and its impact on countries, India remains insulated from the economic fallout and stands out as a 'brighter spot'. Finance Minister asserting that India would give better returns on investments than many other countries has said that foreign investments can provide great additional resources for infrastructure and other sectors. Monsoon and currency movement too would be influencing the markets today. Export oriented stocks will be in a somber mood, as a study of Assocham has said that India’s merchandise exports in 2015-16 are forecast to decline to $265-268 billion, significantly lower than $310.5 billion in the previous fiscal, mainly due to sharp erosion in commodity prices globally. There will be some buzz in the power and coal stocks too, as the government has informed state-owned coal miner CIL that the policy with regard to auction of coal linkages may take some more time to be finalized.

The US markets tumbled in last session on global economic growth after the Fed left the interest rates unchanged. The Asian markets have made a soft start with most of the indices trading lower by about a percent in early deals. Traders were avoiding riskier assets after a European central banker too said the Fed remaining on hold vindicated their view of the global economy.

Back home, Friday’s session turned out to be a fabulous day of trade for the Indian equity markets, with frontline gauges recapturing their crucial 26,200 (Sensex) and 7,950 (Nifty) levels. Though the markets gave up a major portion of their gains in second half but they still managed to register gains of around a percent. Overall sentiments remained up-beat after the US Fed Reserve kept the interest rates unchanged. Some support also came with Minister of State for Finance Jayant Sinha’s statement that the government is aiming for an 8-10 percent annual economic growth through supply-side measures to increase the capacity of Asia’s third-largest economy rather than risk higher inflation by stimulating demand. Additionally markets were aided with government favouring an increase in pension fund EPFO's equity market investment to 15%, from 5% currently, saying it will help contain volatility in the domestic capital markets. Some support also came with Finance Minister Arun Jaitley’s statement that the government has several legislations in the pipeline that will be pursued in coming days. Markets also drew some encouragement with Reserve Bank of India Governor Raghuram Rajan’s statement that India appears an island of calm amid turmoil in other countries. He stressed upon the need for implementation of reforms for sustainable growth in Indian economy and said that in this difficult global environment, growth has to be obtained in right way.  On the global front, European counters traded subdued in early deals, while most of the Asian markets ended in green terrain. Back home, appreciation in Indian rupee too supported the sentiments. Stocks related to banking space remained in action following the RBI according “in-principal” approval for 10 small finance banks that will focus on small geographies for operations. Also, the private sector banks spurted on reports that the government is considering increasing the foreign direct investment (FDI) limit in private banks to 100 percent. Finally, the BSE Sensex surged by 254.94 points or 0.98 % to 26,218.91, while the CNX Nifty gained 82.75  points or 1.05 % to 7981.90.