Markets likely to make a flat-to-positive start

The Indian markets showed remarkable bounce back after sinking below the psychological levels in the early trade of previous session. Finance Minister’s announcement of delaying the introduction of measures to crack down on tax evasion GAAR (General Anti-Avoidance Rules) by one year until fiscal 2013-14 and strength in rupee acted as lifeblood for the ailing markets. Today, the start is likely to be in green and the jubilation mood may continue in the early trade. Though, now traders will be concentrating on the IIP numbers scheduled later in the week to gauge the growth of economy. Markets are likely to cheer the government decision to cut the long-term capital gain tax from 20 per cent to 10 per cent on investments made by private equity funds into shares of unlisted companies. There will be some scrip specific actions to keep the markets buzzing and the market heavyweight Reliance Industries (RIL) may come under pressure as upstream oil watchdog Directorate General of Hydrocarbons (DGH) has refused to recognize two significant natural gas discoveries that RIL had made in a Mahanadi basin block.

There will be lots of important result announcements too, to keep the markets buzzing. Asian Paints, Bajaj Hindustan, Ceat, Central Bank, CESC, Dena Bank, Glenmark Pharma, Hindalco Inds, IDFC, Kotak Mahindra Bank, Whirlpool and UCAL Fuel are among the many to announce their numbers today.

The US markets closed mixed on the first trading day of the week brushing aside the results of weekend elections in France and Greece and uncertainty surrounding the euro zone’s ability to tackle its debt crisis. The start was weak but markets recovered later as investors were relieved after Spain announced a plan to present measures this week to support the country’s ailing banks. The Asian markets have mostly made a positive start, rebounding from their last session’s plunge.

Back home, after a week of horrendous performances, Indian benchmark equity indices finally showed some enthusiasm as market bulls vehemently fought back to protect the psychological 16,900 (Sensex) and 5,100 (Nifty) bastions. The frontline equity indices staged a remarkable recovery on the week’s first trading session as they convalesced over two percentage points from the intraday low levels of around 16,500 (Sensex)and 5,000 (Nifty). The session’s around half a percent gains appeared even more prominent as they came on a day of relentless risk aversion across the global markets. The markets had got off to a worrisome start early morning and lost colossal ground through the first half as investors largely remained influenced by the disconcerting leads from both sides of the Atlantic, where a weak US jobs data along with the success of anti-austerity leaders in European elections multiplied concerns over global economic outlook. Nervousness exacerbated over the European debt crisis after French and Greek voters ousted respective incumbent parties in a backlash against austerity measures aimed at battling the euro zone crisis. However, the second half brought the ray of hope for the domestic bourses which pulled through an unexpected finish after finance minister Pranab Mukherjee buckled under the pressure of foreign investors and deferred the implementation of a controversial GAAR to the next financial year starting April 1, 2013, in an effort to arrest an alarming slide in investor confidence. Investors turned sanguine and resorted to hefty bottom fishing in fundamentally strong and undervalued stocks after Mukherjee’s comment, who opined that in order to provide greater clarity and certainty in GAAR related issues, a committee has been set up which has held several rounds of discussions with various stakeholders including foreign institutional investors and will submit its report by May 31. Meanwhile, another dose of underpinning for markets came from the currency front, as the rupee recovered after initial losses against the US dollar because of RBI’s measures on Friday and also on the back of deferment of GAAR by the government. Hefty short covering was witnessed in the Capital Goods counter, which topped the BSE sectoral space with close to four percent gains. Finally, the BSE Sensex gained 81.63 points or 0.48% to settle at 16,912.71, while the S&P CNX Nifty rose by 27.30 points or 0.54% to close at 5,114.15.