Markets to extend the rally mood with a positive start

The Indian markets rallied in last session and major averages added over 2 percent in a broad based surge. Today, the start is once again likely to be good on sanguine global cues and Nifty can be seen approaching crucial 8200 mark. Traders will be taking some support with statement of finance minister Arun Jaitley that India is going through a 'revolutions of raising aspirations' and a growth of 6% to 8% was no longer enough. Meanwhile, after his biggest ever rate cut, RBI Governor Raghuram Rajan has warned central bankers across the world against competitive monetary easing and pitched for a collective action. He also pitched for free trade, open markets and well-capitalised multilateral institutions to overcome the global economic slowdown which could lead to high political tensions. There will be some buzz in the oil & gas sector stocks, as global credit rating agency Moody's in its credit outlook has said that the 18% reduction in gas price for the six month period starting October 1 was credit-negative for producers such as Oil and Natural Gas Corporation and Oil India since it would lower their revenue and cash flow. The cement stocks too are likely to come under pressure, after Credai went to fair trade regulator Competition Commission of India (CCI) against the Cement Manufacturers’ Association (CMA) alleging price manipulation. It said that cement prices jumped 20-40 per cent in major cities across the country in the past two months.

The US markets extended the rally mood in last session, amid renewed hopes the Federal Reserve will delay raising interest rates after ISM said its non-manufacturing index dropped to 56.9 in September from 59.0 in August. The Asian markets too have made a positive start, rising for the fifth straight session, betting on hopes that policy of different central banks will remain accommodative to counteract weak economic growth.

Back home, boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying over two percentage point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with a huge gap on the upside 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 8,100 (Nifty) and 26,750 (Sensex) bastions as investors took to hefty across the board buying. Sentiments remained up-beat with the World Bank forecast that backed by the prospects of faster implementation of reforms and a favourable terms-of-trade shock, India is expected to weather global volatility with real GDP growth projected to increase to 7.5 per cent despite a weak export recovery. Meanwhile, the government said that though revenue collection will fall short by Rs 50,000 crore but expressed confidence that economic growth will exceed 7.5 per cent, with fiscal deficit remaining within the budgeted target. Some support also came with reports that the government may extend export incentives such as cheap credit to even large players in sectors like pharmaceuticals, chemicals and electronics. Meanwhile, industry body Assocham has approached the government for incentives like a cut in excise duty, teaser loans for housing and interest subvention for exporters, saying that sectors like real estate, power, steel, gems and jewellery are in a real crisis. It has added that RBI, banks, states and the Centre should move fast to rescue the troubled power distribution companies. Markets extended gains with European counters making strong opening, while Asian markets rallied too. 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. Appreciation in Indian rupee too supported the sentiments. Buying in steel stocks also aided sentiments on expectations that China will take steps to accelerate growth. Finally, the BSE Sensex surged by 564.60 points or 2.15% to 26785.55, while the CNX Nifty soared by 168.40 points or 2.12% to 8119.30.