Markets to get a positive start on sanguine regional cues

The Indian markets remained in jubilant mood and snapped the May series on strong note, with the major benchmarks soaring to their highs of the year in the last session. Some upbeat earnings and policy decisions coupled with short covering helped the markets post another big rally. Today, the start of the new series is likely to be in green and the markets will be extending the gains, though all eyes will be on the Fed chief’s speech at Massachusetts on Friday night to look for clues to a rate hike. On the domestic front, traders will be getting some encouragement with the global rating agency Fitch in its Global Economic outlook stating that India's economic growth will accelerate to 8 percent by 2018-19 fiscal as gradual implementation of structural reforms will contribute to higher growth. Meanwhile, Prime Minister Narendra Modi on completion of his government’s two year in office has said that his government has undertaken maximum reforms since coming to power in May 2014 and is expecting the long-pending GST bill to get passed this year. The infra sector stocks will be in action, as the Centre has approved an investment of over Rs 5,530 crore for providing basic infrastructure in over 110 cities across six states under AMRUT scheme for the current fiscal.

There will be lots of important earnings too to keep the markets in action. SBI, BHEL, IOC, IOB, Oil India, Bharat Electronics, BEML, Canara Bank, Crompton Greaves and HPCL are among many to announce their numbers today.

The US markets consolidated in last session and after a volatile trade ended flat, with tech-heavy Nasdaq surging to its best closing level in over a month. Traders largely overlooked the upbeat pending home sales and initial jobless claims data. The Asian markets have mostly made a positive start shrugging off the lackluster session in the U.S. overnight. Though, the Chinese market was marginally in red, the Japanese market was trading higher amid speculation that weakness in economy will lead to delay in planned sales-tax increase.

Back home, the local equity markets rallied for the third day in a row on Thursday, as participants indulged in buying valuable stocks at attractive valuations. Sentiment got a boost after Prime Minister Narendra Modi said that he expects the long-pending GST bill to get the parliamentary nod this year while efforts to amend another contentious legislation on land acquisition are ‘over now’. Improving earnings have raised optimism at a time when investors are betting monsoon rains will be stronger than average, boosting the outlook for rural demand. Private weather forecaster Skymet said that monsoon rains are expected to be 109 per cent above the long-term average, compared with its earlier estimate of 105 per cent. Appreciation in the rupee against dollar too supported market sentiment. Indian rupee was trading stronger by 14 paise at 67.19 at the time of equity markets closing, on increased dollar selling by banks and exporters and due to capital inflows into the domestic equity market. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 652.35 crore on May 25, 2016. On the global front, Asian equity markets ended mostly in green on Thursday as gains in oil prices and positive cues from overseas markets outweighed concerns about a slowdown in Chinese growth and prospects of higher interest rates in the US. European counterparts too are traded in green in the early trade. Back home, traders rejoiced with the report that the new bankruptcy law is credit positive for Indian banks as it increases their bargaining power in distressed asset resolutions. The current weak legal framework for asset resolution has been a key structural credit weakness for Indian banks. The new law entails greater efforts by corporate borrowers to avoid default and thereby a possible insolvency resolution process, as such a procedure would cause management to lose control over the company immediately. Finally, the BSE Sensex surged 485.51 points or 1.88% to 26366.68, while the CNX Nifty rose 134.75 points or 1.7% to 8,069.65.