Markets to extend the gaining momentum with a positive start

The Indian markets overcoming the early choppiness posted decent gains in the last session. Today, the start is likely to be in green and Nifty will come close to 8550 level in early trade, with traders reacting to the macro data announced after the market hours yesterday. While, industrial production recovered, growing by 1.2 percent in May compared to (-) 0.8 percent in April, the retail inflation based on Consumer Price Index (CPI) rose marginally to 5.77 percent in June as against 5.76 percent in May. Meanwhile, Chief Economic Advisor, Arvind Subramanian has said that India would have to pursue an outward orientation strategy if it were to achieve 8-10 per cent GDP growth levels. Subramanian also said that India and other developing countries have strong incentives to keep global markets open. There will be buzz in the fertilizer stocks, as the government has asked private firms to slash retail prices of non-urea fertilisers by up to Rs 5,000 per tonne, in line with public-sector firms, or else it will cut down the subsidy provided to them. There will some action in export oriented stocks too, on report that the government has disbursed Rs 1,433 crore up to March under the interest subsidy scheme to exporters.

The US markets continued their surge in last session and the Dow and the S&P 500 reached new record closing highs, while the Nasdaq hit its best levels of the year. Sharp rise in crude along with optimism about stimulus from Japan and China supported the markets to move higher. The Asian markets too have made a positive start, with Japanese stocks joining the global markets in reversing their Brexit referendum losses on hopes of further stimulus.

Back home, Indian equity markets showcased yet another courageous performance on Tuesday as the local indices rallied by over half a percent in the session, settling above the psychological 8,500 (Nifty) and 27,800 (Sensex) levels. Last session’s optimism got spilled over into the today’s session helping the frontline indices in extending the winning momentum for second successive session, as encouraging global developments buttressed domestic sentiments. Shares across the world gained on speculation the policy makers will act to stem any fallout from the UK decision to leave the European Union, with the Bank of England tipped to cut rates this week. Investors continued to build hefty positions across the board as sentiments got a boost after strong US monthly jobs data reassured investors about the health of the world's largest economy.  On the domestic front, sentiments also got some support with global ratings agency Crisil report that India’s economy will grow at 7.9 percent in the current financial year compared with 7.6 percent in fiscal 2016, if the country receives normal monsoon, 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. Besides, the strong likelihood of a Goods and Services Tax Bill being passed in the monsoon session of Parliament, which starts on July 18, and hopes of a good start to the quarterly earnings season also boosted investor sentiment. Market participants got some confidence with report that monsoon rains, the lifeblood of India's agriculture-dependent economy, will cover the whole of India in the next 48 hours, boosted the hopes of a rise in farm output and incomes after two straight years of drought. On the global front, Asian stock markets climbed for a second day on Tuesday, while European markets extended their gains for fourth consecutive day. Back home, the local benchmarks got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The key indices remained sluggish through the morning trades but saw a sudden spurt in buying post the sanguine European market opening.  Second half of the session saw the key gauges capitalizing on the momentum further and spurting to session’s highest levels in dying hour. Finally, the BSE Sensex surged 181.45 points or 0.66% to 27808.14, while the CNX Nifty rose 53.15 points or 0.63% to 8,521.05.