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

The Indian markets picked up pace in second half of the last session and posted decent gains after RBI inspite of maintaining a status quo hinted accommodative policy stance. Today, the start is likely to be cautious tailing the mixed cues from the global markets. There will be concern in the market with crude oil trading above $50 a barrel. Also, the World Bank has slashed global growth outlook for 2016 to 2.4 per cent from 2.9 per cent, citing sluggishly low commodity prices, uncertain capital flow and lukewarm demand in advanced economies. However, markets may get some support with the government pitching for a ratings upgrade with global agency Fitch Ratings citing improvement in macroeconomic conditions and it’s commitment to fiscal consolidation. Fitch Ratings had in December affirmed India's 'BBB-' rating with a stable outlook. Meanwhile, another global rating agency, Moody’s Investors Service has said that with the Reserve Bank of India (RBI) not altering policy rates, it will be only the transmission of monetary policy that would influence India's economic development and credit profile. There will be some buzz in the services related companies on reports that the government is working to significantly liberalize its visa regime, including allowing multiple-entry tourist and business visas, as part of an effort to increase its services exports.

The US markets extended the gains in last session, though they gave up most of the early gains, assessing Federal Reserve Chair Janet Yellen's remarks on Monday. There was some cautiousness with a Labor Department report showing that labor productivity declined, though less than initially estimated in the first quarter. The Asian markets have made a mixed start and some of the indices are in red, Japanese market has declined as yen rose, while the Chinese market was down ahead of the trade data that’s forecast to show declines in shipments both in and out of the nation.

Back home, Indian stock markets witnessed mostly a stable day of trade on Tuesday, as investors remained optimistic after RBI Governor Raghuram Rajan's accommodative policy stance and US Federal Reserve Chair Janet Yellen's comments.  Sentiments got some support with India Meteorological Department’s (IMD) statement that the Southwest monsoon is ‘very likely’ to hit Kerala on June 9 following favourable conditions. The weather office has forecast rain at a few places in South Tamil Nadu and over one or two places in the northern parts of the state for the next 48 hours. Besides, appreciation in the rupee against dollar too supported sentiments. Indian rupee strengthened by 21 paise to 66.75 at the time of equity markets closing on sustained selling of dollar by banks and exporters amid strong foreign fund inflows. Some support also came with a private report that India’s economic growth is expected to accelerate to about 8.1 per cent in the current financial year on the back of better monsoon prospects and growth in consumption demand. Meanwhile, financials were among the top gainers with State Bank of India (SBI) up over 5.4 percent after the RBI kept key policy rates unchanged.  FMCG counter witnessed hefty buying on hopes that above normal monsoon would boost rural volumes, While some good buying also witnessed in mining and metal stocks amid a global rally in base metal prices after the US dollar fell to a three-week low against a basket of global currencies. On the global front, Asia markets ended mostly in green, while European Markets traded on firm note in early trade. Back home, the benchmark got off to a promising start as investors largely remained influenced by encouraging global developments and up-move in Asian markets after comments from Fed Chair Janet Yellen remained positive on the economy. Even through the frontline indices traded in tight range in morning deals ahead of the RBI’s second bi-monthly policy meet this fiscal, the indices managed to gradually gain traction in the second half of trade. Finally, the BSE Sensex gained 232.22 points or 0.87% to 27009.67, while the CNX Nifty rose 65.40 points or 0.80% to 8,266.45.