Markets to make a strong start; Infosys numbers eyed

The Indian markets rallied in last session, coming out a day of consolidation. Today, the start is likely to be in green on positive global cues, though traders will now be eyeing the second quarter earnings season for further cues and IT bellwether Infosys announcing its numbers later in the day to kickstart corporate earnings season. Strong earnings from Infosys could lift the markets higher, there is expectation of constant currency dollar revenue growth of at least 4-4.5% on a sequential basis for the September quarter and a below 4 per cent growth could disappoint the Street. Traders are also likely to get some support with Chief Economic Advisor Arvind Subramanian’s statement that growth in collection of indirect taxes in the first half of the current fiscal shows robust GDP expansion. Indirect tax collection increased 35.8 percent in the April-September period of the 2015-16 fiscal to Rs 3.24 lakh crore. Meanwhile, the IMF has recommended that the country should launch next phase of economic reforms and improve its business climate for achieving faster and more inclusive growth. The Finance Ministry has said that international agencies like IMF, World Bank and OECD are highly appreciative of India's policy initiatives and measures to deal with tax evasion at global level. There will be some buzz in the pharma stocks, as the government is likely to commission a study soon to assess the impact of foreign direct investment in existing pharmaceutical companies in view of concerns expressed on the issue by a Parliamentary panel. There will be some buzz in banking sector too, after CBI raided Bank of Baroda branches into alleged spurious transactions of Rs 6,000 crore to Hong Kong.

The US markets witnessed further upside in last session though a modest one, but the Dow and the S&P 500 reached their best closing levels in over a month, with traders continuing to react positively to the minutes of the latest Federal Reserve meeting. The Asian markets have made a strong start with some of the indices trading higher by over a percent, extending the biggest weekly gain in almost four years.

Back home, resuming their northward journey, Indian equity benchmarks ended the Friday’s trade with a gain of around a percent with frontline gauges recapturing their crucial 8,150 (Nifty) and 27,000 (Sensex) levels, tracking firm global cues. Sentiments remained up-beat with Central Board of Excise and Customs statement that GST can be implemented anytime during a year and not only the beginning of a financial year. GST, once rolled out, will subsume various levies like excise, service tax, sales tax, octroi, etc. Some support also came with International Monetary Fund chief Christine Lagarde’s statement that the global lender may push ahead with interim steps to give emerging markets a bigger say, despite a stalemate in the US Congress over approval of broader governance reforms. However, investors booked some of their profit at higher levels in noon deals as some cautiousness crept in, as the India Ratings has said that as the base effect wanes, CPI inflation will go up and WPI deflation will come down from the current levels in September. But markets picked up pace in last leg of trade as investors opted to buy fundamentally strong stocks ahead of the earnings season next week. Buying got intensified after European markets made a positive opening, while all the Asian markets ended in green. Buying in Auto space too aided sentiments after data released by Society of Indian Automobile Manufacturers (SIAM) said that domestic passenger car sales rose 9.48 per cent to 1,69,590 units in September from 1,54,898 units in the same month a year ago. Though, total two-wheeler sales in September declined 1.06 per cent to 15,37,137 units and sales of commercial vehicles were up 12.07 per cent at 62,845 units in September. Realty stocks too remained on buyers’ radar, as the Reserve Bank of India (RBI) said that banks can provide home loans up to 90% for properties that cost up to Rs 30 lakh. Finally, the BSE Sensex surged by 233.70 points or 0.87% to 27079.51, while the CNX Nifty gained 60.35 points or 0.74 % to 8189.70.