Markets to make a weak start on heightened Brexit concern

The Indian markets rallied in the last session, the second half surge was on hopes that UK will remain in the European Union and traders lapped up stocks sensing a strong upmove. Today, the start is likely to be very week, tailing the slump in the regional markets. If the verdict is of Brexit, markets will take even harder knock, while the results turning other way may give a mega boost to the bourses. Traders will be worried about the rupee as the Brexit will be having greater impact on it. Meanwhile, consumer goods and auto sector will be in action, on some reports that the central government employees and pensioners are likely to get their 6 months of arrears in October. Manufacturing sector will be getting some support with Finance Minister Arun Jaitley’s statement that the country wants manufacturing sector to grow, offer jobs. Finance Minister Arun Jaitley is on a five-day visit to China, meeting bankers and wealth fund managers there to pitch for more investments in India. The aviation stocks too may see some upmove, with Civil Aviation Minister Ashok Gajapathi Raju stating that to deal with steep rise in airfares, capping would not be the answer as it would also push the floor prices.

The US markets ended with good gains in last session, offsetting the modest pullback seen in the previous session on optimism that voters will oppose the so-called Brexit and shrugged off a batch of U.S. economic data, including a Commerce Department report showing a pullback in new home sales in May. The Asian markets have made a weak start and some of the indices are down by over two percent, jolted by early results from Britain’s referendum on membership of the European Union that put the “Leave” camp ahead.

Back home, after consolidating in the previous two sessions, Indian equity indices managed to pull through a scintillating performance by vivaciously rallying around a percentage points on Thursday, as investors accumulated quality stocks at attractive levels. Though, the session largely remained characterized by choppiness, with sentiment turning better largely in tune with a higher opening in European shares as Britain began voting in a historic referendum on its future in the European Union.  Further, Investors got some relief with the monsoon spreading over many parts of the country, speeding up planting and erasing fears over farm and economic growth after two straight years of drought. The southwest monsoon, after making a delayed entry, has made steady progress and is set to cover the entire country by the end of this month, barring a few pockets in west Rajasthan, west Haryana and Kutch bordering Pakistan.  The June-September rains are crucial for the country’s agricultural sector as around half of the agriculture land is fed by rain. Some support also came with Reserve Bank of India’s (RBI) Governor Raghuram Rajan’s statement that the central bank is watching the situation and will infuse whatever liquidity is needed to keep Indian markets well behaved. On the global front, Asian markets ended mixed on Thursday, while European shares soared in early trade as firmer copper prices boosted mining stocks. Back home, the benchmark got off to a soft start as the indices extended consolidation in early trade, as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices remained choppy through the morning trades but saw a sudden spurt in buying in early afternoon trades post the sanguine European market opening. Late hour of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. However, a mild profit booking in ensured that the key indices shut shops off the intraday highs. Finally, the BSE Sensex surged 236.57 points or 0.88% to 27002.22, while the CNX Nifty rose 66.75 points or 0.81% to 8,270.45.