Markets to make a flat-to-cautious start

The Indian markets despite a volatile day of trade managed to extend the gains in last session. Today, the start is likely to be flat to cautious and markets may consolidate after streak of gains, though much downside is not expected as the global cues are firm. Traders will now be eyeing the corporate second quarter result season starting next week for further cues. A Crisil Research report has said that for the fifth consecutive quarter, India Inc is expected to report single-digit growth in revenues. This is mainly because of fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices. Meanwhile, IMF has said that China's slowdown has repercussions on the global economy, but the impact will be greater in countries that have greater trade exposures with the world’s second-largest economy. There will be some buzz in export oriented stocks, as the government has assured that it will soon announce incentives, including extension of interest subsidy scheme, to boost exports, which are in negative zone since December last year.

The US markets moved higher in last session with Dow extending its longest winning streak this year. Though trade was a bit volatile but major averages managed to maintain a positive bias on the day. The Asian markets are trading mostly in green, with Chinese market surging over 3 per cent after resumption of trading following a week-long break.

Back home, extending their northward journey for sixth day in a row, Indian equity benchmarks ended the volatile session in the green with a gain of around one third of a percent on hopes of rollout of the Goods and Services Tax (GST) from the next financial year. Markets gave up their entire gains in noon deals and entered into red terrain as sentiments weakened on report that International Monetary Fund (IMF) has cut its global growth forecasts for a second time this year, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed. IMF has also lowered India's growth forecast to 7.3 per cent this year, from its earlier estimate of 7.5 per cent, and said that a faster-than-expected deceleration in inflation provides leeway for modest cuts in interest rates. Some cautiousness also crept in after Moody's Investors Service has said that with India facing fourth largest number of terror attacks across the world in 2013, such incidents have a significant and long-lasting negative impact on the economy. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels, recapturing their crucial 27,000 (Sensex) and 8,150 (Nifty) bastions. Some support also came with report that foreign investors have been big buyers of Indian stocks so far this month. Appreciation in Indian rupee too aided sentiments. Firm opening in European counters too supported the sentiments, while the Asian equity markets ended in green. Back home, buying in upstream oil companies mainly provided major boost to the markets after international crude oil prices surged to near a three-month high after a new US forecast showed tighter oil supplies next year. Auto stocks too remained on buyers’ radar on hopes the upcoming festive season would boost sales. Finally, the BSE Sensex surged by 102.97 points or 0.38% to 27035.85, while the CNX Nifty gained 24.50 points or 0.30 % to 8177.40.