Markets to get a jubilant start; extend the rally mood on good global cues

The Indian markets went for a good rally in the second half and benchmark indices moved up by over a percent after Reserve Bank surprised with a better than expected rate cut, however it said that further rate cuts will have limitation but the traders cheered the decision and went for value picking in rate sensitive sectors. Today, the start is likely to be good and the benchmark indices will extend their gains. The oil marketing companies will be in the limelight today as they have virtually threatened to increase petrol prices by around Rs 9 a litre, asking the government to either cut excise duty on petrol or give them Rs. 49 crore a day in compensation. The banking sector too will be in limelight as RBI has asked banks to install a robust mechanism to identify NPA’s. While, in other development it has banned lenders from charging a prepayment penalty on floating rate home loans.

There will be some important result announcements to keep the markets buzzing. HCL Technology, HDFC Bank, CMC, CAN Finance Homes etc. will be announcing their numbers today

The US markets surged on Tuesday to post their best one day gains in a year, better earnings number coupled with positive news from the Europe bolstered the morale of the investors. German analyst and investor confidence rose unexpectedly in April to a high not seen since June 2010. On the same time Spanish debt sales too showed better-than-expected results. The Asian markets have made a positive start and some are heading towards their biggest gain this month. Good economic reports from Europe and US apart from International Monetary Fund raising global economic forecasts have led the markets higher.

Back home, After snapping last trading session on a cautious note, Indian benchmark equity indices finally showed some enthusiasm as market bulls eagerly waited for some significant upside triggers to cover the huge pile of short positions that got build up in the past week. The frontline indices surged on large volumes amid heightened volatility as gains on the European stock markets underpinned domestic sentiments and invigorated the key gauges which had succumbed to profit booking at higher levels. The stock markets showed a kneejerk reaction to the higher than expected rate cut by Indian central bank as the benchmarks spurted around the psychological 17,350 (Sensex) and 5,300 (Nifty) levels within seconds. This was RBI’s first interest rate reduction in three years and the move is likely to spur growth that has slowed markedly due to relentless monetary tightening. However, the key gauges could not sustain the gains and pared most of them since market participants grew concerned over the language of RBI, which suggested that there may be no more rate cuts, causing a bit of disappointment. The rate cut has come in the backdrop of lower than expected growth in industrial production and slight moderation in March WPI inflation, however concerns remained that the inflationary pressure would reignite due to volatile international crude oil prices and the depreciating Indian rupee. But the last leg of trade saw the local markets rally to day’s high on the back of supportive cues from European markets and the benchmark’s northbound journey only halted with the session’s close. Investors piled up hefty positions in the interest rate sensitive Realty counter, which surged by about two and half a percent and topped the BSE sectoral space. While the Metal and PSU pockets too gained traction and settled with around two percent gains. The ADA Group stocks made their presence felt in the session as stocks like Reliance Infra, Reliance Communications and Reliance Power rallied in the range of 3-6% in the session. Though there remained no sectoral laggards, however some index heavyweights like M&M, RIL and Maruti failed to keep their heads above the water. Finally, the BSE Sensex jumped 206.99 points or 1.21% to settle at 17,357.94, while the S&P CNX Nifty climbed by 63.50 points or 1.22% to close at 5,289.70.