Markets to get a cautious start, may see some recovery in later trader

The Indian markets rallied in last session, supported by lower level buying in value stocks, while some sector related development too supported the markets to move higher. Today, the start is likely to remain cautious on sluggish global cues. Traders will also be concerned with report that India’s merchandise exports contracted again, albeit at their slowest pace in 18 months in May as non-petroleum exports finally turned positive, led by exports of engineering goods and gems and jewellery. Exports contracted at 0.79% in May while imports slipped 13.16%, leaving a trade deficit of $6.27 billion. Markets however can see some upmove in the latter part of the trade as the crude in global markets continues to move lower. The power sector will be buzzing with a two day renewable energy conference, which will be discussing implementation of various ongoing schemes of the government and issues pertaining to power, coal and renewable energy sectors. The PSU stocks too will be in action, as part of its disinvestment plan as well as to meet market regulator (Sebi) guidelines on public holdings, the government has approved a 10% disinvestment in Housing and Urban Development Corporation (Hudco) through an initial public offer.

The US markets made a negative close in last session, though the bourses remained in green for most part of the day but came under pressure going into the close, as the Federal Reserve seemed to offer a dovish assessment of the outlook for interest rates, while leaving rates unchanged. The Asian markets have made mostly a lower start and the Japanese market was still in red, despite the Bank of Japan’s decision to keep the rates unchanged at -0.1%, as the yen strengthened against other major currencies.

Back home, after witnessing a wonderful recovery in previous session, Indian benchmark indices took a step forward and rallied over a percent on Wednesday, on account of fresh round of value-buying by funds and retail investors in the frontline bluechip sectors. Sentiments got a boost with Finance Minister Arun Jaitley’s statement after a meeting of Empowered Committee of state FMs on the long awaited indirect tax reform that every state has either supported or accepted the idea of the pan-India Goods and Services Tax (GST) except Tamil Nadu. GST Empowered Committee Chairman Amit Mitra too said that there was “general consensus” on the issue of dual control over taxation structure between the Centre and states. Market participants also got some confidence with NITI Aayog Vice-Chairman Arvind Panagariya’s statement that India's economic growth will cross the 8 per cent-mark this fiscal on the back of good monsoon and pick up in manufacturing. He said the growth in the last quarter of the previous fiscal touched 7.9 per cent because of uptick in manufacturing activity and improved performance of agriculture sector. Besides, appreciation in the rupee against dollar too supported sentiments. Indian rupee strengthened 14 paise to 67.11 against the US dollar at the time of equity markets closing on fresh selling of the American unit by exporters. Meanwhile, shares of all three listed airlines companies - Jet Airways (India), SpiceJet and InterGlobe Aviation (IndiGo) - gained after the Union Cabinet cleared Civil Aviation Policy, while public sector oil marketing companies (OMCs) gained, after the global crude prices fell to their three weeks low. Moreover, shares of State Bank of India’s subsidiaries surged up to 20 per cent on Cabinet’s approval to the proposed merger of SBI’s five subsidiaries and Bharatiya Mahila Bank (BMB) with the parent bank. On the global front, Asian market ended mostly higher on Wednesday, while a rally in miners and retailers lifted European stocks out of a five-day rout. Back home, Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour on the back of broad based bottom fishing in undervalued stocks. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off intraday highs. Finally, the BSE Sensex surged 330.63 points or 1.27% to 26726.34, while the CNX Nifty rose 97.75 points or 1.21% to 8,206.60.