Markets to get a positive but cautious start

The Indian markets managed a flat closing with a positive bias in the last session. Today, the start is likely to be in green taking cues from the global markets, but the mood will remain cautious and traders will be looking for further cues ahead of the US FOMC rate decision next week. Also, there will be concern with rising crude oil prices, which are hovering near their one year highs. Markets may get some encouragement with Prime Minister Narendra Modi’s statement that his dream was to economically empower every Indian by 2022, the 75th anniversary of India's Independence Day. There will be some buzz in infra sector, as the governing council of National Investment and Infrastructure Fund chaired by finance minister Arun Jaitley reviewed progress of operationalising India’s maiden sovereign wealth fund NIIF, including the selection of its CEO and projects shortlisted for making initial investments. The government has proposed a corpus of Rs 40,000 crore for NIIF, which will invest in infrastructure projects.

The US markets made a modestly higher close in last session amid increase in oil, with the S&P 500 reaching its highest closing level in well over ten months. Though, the overall trading activity remained relatively light amid the lack of more significant U.S. economic data on the day. The Asian markets have made a mixed start again and some of the major indices are in red, led by the Japanese market which retreated on strength in yen.

Back home, Wednesday’s trading session was clearly of consolidation as the Indian benchmark indices appeared a bit fatigued and remained in directionless trajectory throughout the day.  However, the benchmarks managed to extend the winning momentum for the second consecutive day, as local sentiments continued to show signs of improvement after Indian Meteorological Department’s report that Southwest monsoon has hit Kerala. The day’s session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band lack of triggers. Sentiments got some support with the government pitching for a ratings upgrade with global agency Fitch Ratings citing improvement in macroeconomic conditions and its commitment to fiscal consolidation. Fitch Ratings had in December affirmed India's 'BBB-' rating with a stable outlook.  Appreciation in the rupee too provided some support to domestic markets. Indian rupee strengthened by 12 paise to 66.66 against the US dollar at the time of equity markets closing on increased selling of the American currency by exporters amid foreign fund inflows. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 499.73 crore on June 7, 2016. Meanwhile, defence-sector stocks, including Bharat Electronics, Astra Micro Wave Products, Reliance Defence and Engineering and Walchandnagar Industries, rallied after the private reports showed India was on its way to becoming a member of the Missile Technology Control Regime (MTCR). The deal will pave way for India to procure high-end missile technology and surveillance systems by leading manufacturers.  Moreover, logistics companies surged on hopes of clearance of the crucial Goods and Services Tax (GST) Bill in the upper house of the Parliament, while telecom stocks gained on reports the Telecom Commission has lowered the annual spectrum usage fee to 3% of revenue for all bands in the upcoming spectrum auction scheduled in July. Finally, the BSE Sensex gained 10.99 points or 0.04% to 27020.66, while the CNX Nifty rose 6.60 points or 0.08% to 8,273.05.