Markets likely to make a strong start on Rail Budget day

The Indian markets continued their bull run in last session despite weak global cues, supported by the foreign funds consistent buying the benchmark indices added another over a percent. Today is one of the important day for the crucial week with the announcement of rail budget and the markets are likely to make a strong start. Railway related stocks like Titagarh Wagons, Texmaco, Cummins India, BEML, Kalindee Rail, Siemens and Kernex Microsystems are likely to remain in limelight. However, the banking stocks may continue to remain under pressure after the Standard & Poor's said that slower economic growth and high inflation and interest rates were likely to hit the asset quality and earnings of Indian banks in 2012-13. Traders will also be eyeing the monthly inflation number which is likely to slightly moderate further. The Wholesale Price Index (WPI), eased to a two-year low of 6.6 percent year on year in January.

The US markets went for a rally touching their multi-year high on Tuesday sparked by the dividend and stock buyback announcement from JPMorgan. The banking giant announced late Tuesday that it was hiking its quarterly common stock dividend by 5 cents to 30 cents a share and that its board had authorized a $15 billion stock buyback program. There was other encouraging news that helped the markets move higher, the FOMC said that they have decided to keep the federal funds rate at zero to a quarter of a percent at least through late 2014. Fed officials acknowledged that labor market conditions have improved and that the unemployment rate has declined notably in recent months. In other development Commerce Department reported that retail sales in the US rose broadly. Most of the Asian markets have made a boisterous start, with indices trading higher in a range of 1-2 percent. The news of surge in US retail sales has boosted the earnings outlook for Asian exporters and the Japanese Nikkei was trading up by over 2 percent in early trade.

Back home, the enthusiasm in Indian stock markets just doesn’t seem to be waning any time soon as buying momentum remained intact for the third session in a row, taking the benchmark equity indices to the highest levels seen more than in last two weeks. The frontline indices surged over one and a quarter percent in the session and re-captured psychological 17,800 (Sensex) and 5,400 (Nifty) levels,  thanks to the recent liquidity move by Reserve Bank of India and encouraging cues from the markets across Asia and Europe. The markets are witnessing pre-budget rally as market participants have piled up hefty positions across the board ahead of a lot of important events like announcement of monthly WPI numbers, Railway budget, RBI monetary policy review meet, Indian Economic Survey and the Federal budget. Investors also remained optimistic as they awaited the advance tax number announcement by domestic companies, due on March 15, and speculated that increased tax numbers would signal improved corporate earnings. The Metal counter witnessed hefty buying as it topped the BSE sectoral chart with over 3% gains followed by the Oil & Gas pocket which settled with gains of over 2.5%. Index heavyweight Reliance Industries made its presence felt by jumping over 2.5% on hopes of a reduction in oil subsidies in the upcoming federal budget while IT bellwether Infosys surged over 1.5% on the back of positive comments about orders from its CEO. But the rate sensitive counters could not whole heartedly participate in the day’s rally as investors remained cautious a day ahead of the release of WPI inflation. The gain in banking counter also was limited after rating agency S&P’s kept the rating of 10 Indian banks including 7 public sector banks unchanged at BBB- with stable outlook but predicted a tough fiscal year ahead, citing slowing economic growth, sluggish credit demand, tight operating margins and a surge in bad loans. In the meantime, Indian bourses remained stable through the session and managed to perform better than their Asian counterparts. Finally, the BSE Sensex climbed 225.95 points or 1.28% to settle at 17,813.62, while the S&P CNX Nifty jumped by 69.95 points or 1.31% to close at 5,429.50.