Markets to extend the gaining momentum on sanguine global cues

The Indian markets after showing a knee-jerk reaction to RBI governor Raghuram Rajan’s decision not to continue for second term, made a smart bounce back and posted decent gains in the last session. Today, the start is likely to be in green but mood will remain cautious on Brexit jitters. However, the Reserve Bank of India and the Governor has assured that it would intervene in the currency market to stem volatility should there be a Brexit vote on Thursday. Traders will also be getting some support with report of good advancement of monsoon, which after a delay is now romping its way through central and north India, allowing farmers to finally begin sowing. Meanwhile, a top World Bank official has said that the banking reforms unveiled by the government and the central bank are unlikely to stall in the aftermath of RBI governor Raghuram Rajan's decision not to seek a second term as the country's macroeconomic policies are strong. However, World Bank has also said that India needs to activate “stalled engines”, including private investment and rural demand, to sustain 7.6 percent growth rate in the coming years.  Pharma, defence and airlines stocks that moved higher after government opened the floodgates to foreign direct investment are expected to continue their jubilation even today.

The US markets closed higher despite coming off the day’s peak in last session, partly offsetting the notable losses posted last week. The strength was on easing concerns about Thursday’s referendum on whether Britain will remain in the European Union, though traders kept an eye on Fed Chief Janet Yellen's semi-annual testimony before Congress later in the week. The Asian markets have made mostly a positive start. The Japanese market too after initial fall on yen’s strength, has recovered and was trading with half a percent of gains.

Back home, exuberant Indian markets finished the enthralling first day of a new week with a spirited performance, extending Friday’s rally on the back of broad-based buying amid firm global cues. Sentiments got a boost with the report that quick progress of monsoon in last one-two days has taken the crucial weather system to many new regions and is expected to intensify in the days ahead.  This is good news for farmers who have suffered two consecutive droughts and have so far planted crops in 11% less area than last year.  Some support also came with Economic Affairs Secretary Shaktikanta Das’ statement that the country’s GDP growth is likely to touch 8 per cent in the current fiscal 2016-17, on the back of above normal monsoon. Das expressed hope that the likely passage of Goods and Services Tax (GST) bill in Parliament would add to the business sentiment and will further help in country’s growth. Further, market participants digested Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s decision of not going for a second term and bow out in September. The global rating agency Fitch stated that India’s sovereign ratings will not be affected solely by the unexpected departure of central bank governor Raghuram Rajan at the end of his term in September. Meanwhile, shares of companies engaged in defence and aviation sectors rallied after the government relaxed foreign direct investment (FDI) norms in civil aviation, airports, pharmaceuticals and defence sectors. Further, Real estate stocks surged for the second straight day after the Securities and Exchange Board of India (Sebi) proposed further relaxations to the real estate investment trusts (Reits) regulations, to attract real estate developers towards launching these instruments.  On the global front, Asian stock markets ended the first day of the week on optimistic note, while European counterparts too appeared to be in a sanguine mood. Back home, the frontline indices slowly but steadily started gathering steam and surged by around half a percent by the noon session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour of the trade. Finally, the BSE Sensex surged 241.01 points or 0.91% to 26866.92, while the CNX Nifty rose 68.30 points or 0.84% to 8,238.50.