Markets to extend the rally mood with a positive start

The Indian markets went for a rally in last session on some encouraging economic data and gains in the other global markets. Today, the start of the new week and the month is likely to be in green, though there will be some cautiousness too ahead of the RBI’s monetary policy announcement tomorrow. Also, the Standard & Poor's Ratings Services has said that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed. Meanwhile, Finance Minister Arun Jaitley has said that the Congress will “see reason” and help in passage of GST legislation, stuck in Rajya Sabha, in the Budget session of Parliament beginning next month. Markets may get some support with, NITI Aayog Vice-Chairman Arvind Panagariya’s statement that  India is expected to get on to a double-digit growth in the next 2-3 years if reform process continues. Steel stocks will kepp buzzing with Union Minister Narendra Singh Tomar stating that additional steps will be taken to protect domestic steel industry. Today, the auto stocks will be in action once the monthly sales numbers starts trickling in. The PSU oil marketing companies too are likely to react to the government’s decision to hike the excise duty on petrol by Re 1 per litre and Rs 1.50 on diesel, the third increase this month, to mop up over Rs 3,200 crore in additional revenue, netting in all Rs 17,000 crore in three months. 

The US markets surged in last session supported by some good earnings and in reaction to the Bank of Japan's surprise decision to introduce negative interest rates. The Asian markets have made mostly a positive start and the Japanese market was heading for an almost one-month high as yen was on track for its longest slump. However, the Chinese shares got off to a weak start after an official measure of activity in the factory sector fell to its lowest since mid-2012.

Back home, Indian benchmark equity indices staged a blockbuster performance on the last day of the week, by vehemently rallying by over one and half percent in the session and re-conquering their several psychological levels. Sentiments got a boost after a government report showed that India’s fiscal deficit stood at Rs 4.88 lakh crore during April-December or 87.9 percent of the full-year target, indicating an improvement in its finances. The deficit was 100.2 percent of the full-year target during the same period a year ago. The improvement is mainly on account of buoyancy in tax collections, which have kept revenue deficit in check. Local sentiments also got buttressed by strong rally in global markets as a rebound in commodity prices and Bank of Japan's bold move to adopt negative interest rates to stimulate the Japanese economy stoked global risk appetite for equities. Some support also came with the buzz that Reserve Bank of India (RBI) is likely to go for a final 25-bps repo rate at its policy review meet on February 2, 2016. Appreciation in Indian rupee too aided sentiments. Snapping its three-day losing streak, Indian rupee firmed up by 30 paise to 67.93 against the US dollar on fresh selling of the American currency by exporters. On the global front, Asian markets ended higher on Friday, European markets too gained. Back home, after getting dismal start, Indian benchmarks gained momentum and entered into positive territory in early trade, tracking positive trade in other regional markets. Thereafter, the frontline indices started their northward journey and continued throughout the session as strong buying interest was seen across the metal and oil and gas sector on the back of rebound in commodity prices. Finally, the BSE Sensex surged 401.12 points or 1.64% to 24870.69, while the CNX Nifty ended up by 138.90 points or 1.87% to 7,563.55.