Markets to extend the gains with a positive start

The Indian markets bounced back from the intraday low to post gains of over half a percent in last session, supported by some value buying at lower levels. Today, the start is likely to be in green and the markets will be extending the last session gains on positive global cues. Traders will also be getting some encouragement with Finance Minister Arun Jaitley exuding confidence in getting the GST Bill passed in the upcoming monsoon session. Jaitley has said that he has spoken to the chief ministers of all states, including those ruled by the UPA and the Congress, and they are a “strong supporter” of the idea. However, there will be some cautiousness too, with Finance Minister stating that India will have to renegotiate the tax treaty with Singapore to extend the capital gains tax provisions of the recently-concluded tax pact with Mauritius. Meanwhile, there will be some buzz in the markets with the Reserve Bank of India proposing to allow foreign portfolio investors investing in unlisted corporate bonds following the budget announcement earlier in February. Some action can be seen in banking stocks, as SBI chairwomen has called for the government to park surplus funds with banks instead of the RBI to make up for fund shortage.

There will be lots of important result announcements too, to keep the markets in action. Motherson Sumi, United Bank, Syndicate Bank, Voltas, Mahindra Holidays, Gujarat Gas and GSK Consumer Healthcare, etc will announce their earnings.

The US markets surged in last session, offsetting the pullback seen over the past few weeks, amid a sharp increase by the price of oil and traders ignored a New York Fed report that its general business conditions index slid to a negative 9.0 in May from a positive 9.6 in April. The Asian markets have made a jubilant start and some of the indices are trading higher by over half a percent, led by energy shares as crude oil climbed to six months high. However, the Chinese market continued its somber run with a modest cut in early deals.

Back home, Indian stock markets ended the first day of the week on an optimistic note as gains in a few blue chips such as Dr. Reddy's Laboratories and ITC offset a slump in state-run lenders such as Bank of Baroda. Sentiments got boost after data showed India’s wholesale prices unexpectedly rose for the first time in 18 months in April, ending a period of deflation. India's annual wholesale price inflation (WPI) moved up into the positive zone at 0.34% for April, from (-) 0.85% in March and (-) 2.43% during the corresponding month of the previous year. Some support also came with the report from Economic think-tank NCAER projecting India's economic growth rate to improve marginally to 7.7 percent in 2016-17 against the backdrop of IMD's forecast of better monsoon rains this year. However, investors remained cautious with industry body FICCI’s survey that growth of India's manufacturing sector may decelerate during June quarter due to factors like bleak export outlook, poor demand and high cost of borrowing. Furthermore, the report that onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1, the first negative signal since it forecast above-normal rainfall this season after two years of drought, also weighed on the sentiment. On the global front, most of Asian markets ended the day on a firm note, while some weakness was seen at European counters at opening. Back home, the benchmark got off to a soft start as the indices showed signs of consolidation in early trade, lacking any significant upside cues. The indices moved only sideways thereafter but touched intraday lows in the noon session as fresh bouts of selling pressure was witnessed after weak European opening. However, the frontline gauges managed to pare the losses and rise above the neutral line in the afternoon trades, as investor turned optimistic. The bourses further capitalized on the momentum and spurted in final hour of trades on the back of broad based bottom fishing in undervalued stocks. Finally, the BSE Sensex surged 163.66 points or 0.64% to 25653.23, while the CNX Nifty rose 45.85 points or 0.59% to 7,860.75.