Markets likely to get a green start on positive global cues

The Indian markets despite a good going throughout the day lost their momentum in the last and closed with marginal gains only in previous session. Today, the start is likely to be in green on positive global cues. Though, the concerns of Spain will continue weighing and the markets will wait for the European indices to open, for further direction.  Export oriented companies are likely to rejoice with government unveiling a seven pronged strategy, including subsidized loans and other sops, to boost exports. However, the telecom stock may remain dull as the EGoM headed by Pranab Mukherjee has once again pushed the decision on reserve price for the 2G spectrum auction to another day. However, the markets are likely to get some comfort with the chief economic adviser to Finance Minister, Kaushik Basu’s statement that the country is having a contingency plan to deal with the European crisis and there are different crisis management groups within the government to deal with such a possible scenario. Meanwhile, Prime Minister Manmohan Singh has called a meeting on infrastructure today, which is expected to finalise an Airline Hub Policy and give a push to setting up of 17 new airports, including seven international ones.

The US markets added some gains on Tuesday, recovering from last week’s sharp selloff amid investor angst about the euro zone's financial crisis, on a positive economy report showing that the US services sector grew slightly faster than expected in May. Though, concern from Europe regarding Spain's deepening funding worries capped the gains. The Asian markets have made a positive start and most of the indices are up by over half a percent in early trade after some comforting news from the global economy front and as the Group of Seven nations yesterday agreed to coordinate their response to Europe's turmoil.

Back home, Tuesday’s trading session turned out to be a fruitless one for stock markets in India as the benchmark equity indices failed to sustain the gains they amassed in the early part of session. The frontline gauges traded with strong momentum for most part of the day but drifted to lower levels in the last leg of trade to settle with slight gains. Coming after a day’s consolidation, the benchmark gauges got off to a promising start, tracking sanguine cues, which the Asian markets exhibited. Most markets in the region, which suffered nasty lacerations of over two percent in last session, bounced back as investors turned hopeful ahead of the meetings of Euro-zone policymakers and the wider group of seven (G7) industrialized nations to discuss various measures to avert an onerous financial crisis in the European Union, including greater fiscal integration in the euro zone. Back home, after hitting the session’s lows in early morning trades, the frontline gauges managed to capitalize on the momentum and sailed around the psychological 4,900 (Nifty) and 16,100 (Sensex) levels. However, those levels proved to be tough nuts to crack for the key indices, which got weighed down in the second half as the cues from money markets undermined sentiments. The rupee, Asia’s worst performing currency pared early gains to slip back to hit intraday lows of 55.91 on the back of a sharp fall in the euro and dollar demand from oil firms. Nevertheless, the markets managed to snap second straight session in the positive territory as market participants cheered reports that India's annual monsoon rains have arrived at the southern Kerala coast, brightening the prospects of higher farm output. Moreover, investors also drew some solace from a HSBC survey, which showed that service sector activity in India staged a strong performance in May as it expanded at the fastest clip in last three months largely because of significant increase in new work orders. On the BSE sectoral front, the investors resorted to hefty short covering in the Capital Goods counter, which surged around two percent and remained the top gainer in the space. The rate sensitive Bankex index too traded with notable gains of around a percent and provided the much needed support to the benchmarks. On the flipside, the high beta Realty sector along with defensive FMCG pocket got battered by over a percent and capped the upside chances for the markets. Finally, the BSE Sensex rose 32.24 points or 0.20% to settle at 16,020.64, while the S&P CNX Nifty gained 15.15 points or 0.31% to close at 4,863.30.