Markets to extend the gains on bullish global cues

The Indian markets regained momentum in latter half of the trade in last session and posted good gains, with major averages regaining their crucial psychological levels. Today, the start is likely to be in green and the markets will extend the gains for the third day. Though, markets across the globe are heading into Fed decision day on a more positive note, but some cautiousness is likely to creep in towards the end of the trade in Indian market, with Fed widely expected to raise interest rates and traders eyeing the wording of the accompanying statement to gain clues about the outlook for policy. Markets may get some support with Finance Minister Arun Jaitley making a fresh bid to end the deadlock on Goods and Services Tax (GST) bill as he reached out to main opposition Congress. Meanwhile, it has been reported that the draft model law on  GST will be finalised in a month's time. However, there will be some concern too, as the exports declined for the 12th month by more than 24 per cent to $20 billion in November, compared with $26.4 billion a year earlier, indicating that tepid global demand continues to be a drag on India's economic recovery. There will be some buzz in the oil & gas sector stocks, as the Oil Minister Dharmendra Pradhan has said that the Petroleum Ministry wants the Finance Ministry to cut cess on crude oil and make it ad valorem in view of the slump in global oil rates.PSU oil marketing companies too will see some action, as the Petrol price has been cut by 50 paisa and diesel by 46 paisa a litre.

The US markets extended their gains, partly reflecting a positive reaction to a rally by European stocks, with the price of crude oil closing higher for the second consecutive session, ahead of Fed’s policy meeting announcements. The Asian markets have made a strong start with some indices surging by over two percent in early deals, as dollar weakened against major currencies and oil resumed declines.

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 around half a percent. 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 25,300 (Sensex) and 7,700 (Nifty) bastions. Earlier, domestic bourses traded listless for most part of the day’s trade near their previous closing levels as sentiments remained dampened on the report that retail inflation rose to 5.41 per cent in November, 4th straight month of uptick as prices of vegetables, pulses and fruits went up further to push the rate of price rise above the Reserve Bank’s comfort level. However, sentiments took U-turn in last hour of trade as market-participants opted to take positions in beaten down but fundamentally strong stocks. Traders drew some encouragement with report that Global rating agency Fitch has retained India's sovereign rating at BBB-/Stable -- the lowest investment grade and said that the country will continue to post good growth despite subdued prospect for the Asia Pacific region. Meanwhile, market participants will keenly watch the proceedings of the two-day US Federal Reserve meet which begins later today. The US central bank is widely expected to raise interest rates for the first time in almost a decade. Positive opening in European counters too supported the sentiments, while Asian Markets ended the session mixed. Back home, appreciation in Indian rupee too supported the sentiments. Buying in oil counters aided sentiments following slight rebound in global crude oil prices. FMCG stocks too edged higher despite rise in November consumer price inflation. Auto shares recouped early losses after witnessing selling pressure in early trades on concerns that the proposed ban on diesel vehicles by the NGT in Delhi could spill on to other states. Finally, the BSE Sensex surged by 170.09 points or 0.68% to 25320.44, while the CNX Nifty gained 50.85 points or 0.66% to 7700.90.