Markets to get a soft-to-cautious start on feeble global cues

The Indian markets posted a wonderful day of trade in last session and the benchmarks surged over a percent, reclaiming their crucial levels in intraday trade and closing near the highs. Today, the start is likely to be in red tailing the weakness in the global bourses and the markets will be consolidating after four straight sessions of gains. There will be some profit taking in the high flying counters of recent rallies. Meanwhile, Finance Ministry has said that India is well prepared to deal with the impact of the US Federal Reserve interest rate hike and the end of uncertainties will actually help policy makers in emerging economies. Though, any major fall is not expected but traders will be eyeing the global developments with Bank of Japan coming up with its money policy review. On the domestic front, the banking pack is likely to be in action, as the RBI in order to improve transparency and ensure speedier monetary policy transmission has said that all banks will have to follow a new uniform methodology from the next fiscal for calculation of base rate on the basis of the marginal cost of funds. The apex bank stated that marginal cost pricing of loans will help the banks become more competitive and enhance their long run value and contribution to economic growth. The aviation stocks too are likely to see some action, as the government has deferred plan to impose two percent levy on most domestic and international air tickets from January 1.

The US markets slumped in last session on persistent concern over faltering global economic growth, led by declines in energy and materials shares. The major averages closed near the lows of the day on profit taking after the strong gains of previous session. The Asian markets taking cue from Wall Street slipped in early deals and some of the indices are down by over half a percent on anxiety over commodities and the widening divergence in global monetary policy.

Back home, Thursday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of over 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 25,800 (Sensex) and 7,800 (Nifty) bastions. Key domestic indices started the day firmly tailing the global rally after the US Federal Reserve raised interest rates for the first time in nearly a decade and signalled its tightening cycle would be ‘gradual’. But the early euphoria fizzled out and markets turned choppy as the government appeared reconciled to miss the April 1 deadline to roll out the ambitious tax reforms with the Congress cold shouldering parliamentary affairs minister M Venkaiah Naidu’s call to meet afresh for talks on the GST bill. Sentiments took U-turn in last hour of trade as market-participants opted to take positions in beaten down but fundamentally strong stocks. Sentiments remained up-beat after Fitch Ratings said that India’s less dependence on exports and improved external balances makes it better placed than many of its peers after the American central bank -- the US Federal Reserve -- raised its key interest rates. Credit rating agency also said that India is not immune to potential market jitters on account of interest rate hike by the US Fed, but favorable economic growth outlook makes it attractive for foreign investors. Some support also came with Chief Economic Adviser Arvind Subramanian’s statement that the rate hike by the US Federal Reserve is in line with global expectations and its impact on India will be ‘very minimal’ due to strong macroeconomic conditions. Positive opening in European counters too supported the sentiments, while Asian markets rallied on Thursday. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Appreciation in Indian rupee too supported the sentiments. Meanwhile, select stocks from metal and mining counter edged higher as the government approved allotment of coal blocks to public sector entities for commercial mining, taking the industry a step closer to complete deregulation and allowing private entry. Finally, the BSE Sensex surged by 309.41 points or 1.21% to 25803.78, while the CNX Nifty soared by 93.45 points or 1.21% to 7844.35.