Markets to extend the gains, Nifty may retest 8500 level

The Indian markets participated in the global rally with a huge gain in last session and the major bourses surged to near there one year high, with soaring global economic growth outlook after US came with a better than expected jobs data. Today, the start is likely to be in green and the markets will be extending the gains on sanguine global cues and Nifty may retest the crucial psychological levels of 8500. Though, traders will be eyeing the key economic data of Industrial Production and CPI inflation, slated to be announced after the market hours. Markets will be getting some support with the global rating agency Crisil's latest report that Indian economy is likely to grow at 7.9 percent in the current fiscal provided the country receives normal monsoon as it will boost agriculture growth and lift rural demand. The rating agency also expects the Reserve Bank of India to continue its accommodative monetary stance and cut the repo rate by another 25 bps this fiscal. Also, there will be some comfort with report that the rains are set to cover the entirety country within the next 48 hours. The good rains prospects have rekindled the hopes of rate cut by RBI and the rate sensitive stocks are likely to continue moving up. There will be some result announcements too.

The US markets extended their gains in the last session with the S&P500 closing at a record high, though there were no major economic announcements but traders continued taking cues from the Friday’s jobs report. The Asian markets have made a positive start, with Japan once again leading the pack, heading for the steepest two-day climb since February after Prime Minister Shinzo Abe said he will order a fresh fiscal stimulus package. Meanwhile, the Bank of Japan’s Producer prices in Japan were down 0.1 percent on month in June.

Back home, Indian markets showcased a gung ho performance on Monday galloping over one and half percent in the session, as fervent bulls relentlessly piled up hefty positions not only in heavyweight stocks but across the broader markets too. The surprise triple digit rally helped the benchmarks to conquer a lot of psychological levels on their northbound journey and scale highest levels seen in last eleven months. Sentiments across the globe remained highly sanguine in the session after strong US monthly jobs data reassured investors about the health of the world's largest economy. While strong June jobs report put to rest lingering worries about the labor market and the broader economy, investors veered around to the view that the Federal Reserve will not hike interest rates in the near term, given the uncertain consequences of Brexit and the November presidential election. On the domestic front, local investors also cheered NITI Aayog Vice Chairman Arvind Panagariya’s statement that the government has put the economy on the path of reform to achieve a high growth trajectory though there are significant lags between policy decisions and outcomes which need to be addressed. He also mentioned that today, the economy is far healthier compared to the last year of UPA II in all macroeconomic parameters. Besides, the increasing possibility of GST approval as Congress indicated softening of its stand and satisfactory progress of the monsoon in the country so far, also improved sentiments. Around 89% of the country has received normal and excess rainfall, owing to a good amount of monsoon in several parts, while large parts of Gujarat have recorded deficiency of more than half. Overall, the country has recorded 254 mm of rainfall from June 1 to July 10, as against 251 mm, which is one percent more. On the global front, Asian stock markets ended higher on Monday, while European shares rose for the third straight session. Back home, the NSE’s 50-share broadly followed index Nifty, settled with triple digit gains above the crucial 8,400 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated around five hundred fifty points to close above the important psychological 27,600 levels. Finally, the BSE Sensex surged 499.79 points or 1.84% to 27626.69, while the CNX Nifty rose 144.70 points or 1.74% to 8,467.90.