Markets likely to get a positive start tailing the global bourses

The Indian markets, bucking global trend went for a rally after Prime Minister  at G20 meeting vowed to revive growth  and said that government is determined to take tough steps, including controlling of subsidies, to revive investor sentiment. Today, the start is likely to be in green and the slight extension of last session rally is expected in early trade. Traders will be cautious ahead of the US FOMC meeting outcome, while on domestic front rate sensitives are likely to remain under pressure as RBI Governor Duvvuri Subbarao has said that Indian inflation exceeds acceptable levels and restraining it may require sacrificing economic growth. While, showing the bearish sentiments of the global investors, foreign direct investment inflows slipped nearly 8% to $7.8 billion during January-April 2012. Today the cement sector stocks will be under pressure as Competition Commission of India (CCI) is set to pass an order, accusing top cement companies of creating a cartel. It has been reported that the companies will have to pay eight per cent of their average sales in the past three years.

The US markets rallied on Tuesday on hopes that additional fiscal stimulus is forthcoming from the Federal Reserve. The rising worries from the Europe boosted the optimism Federal Reserve's policymakers will agree on extending stimulus measures in the FOMC meeting. In Europe, Greek parties promised to form a coalition government soon and seek concessions from the country's EU and IMF lenders based on austerity measures. The Asian markets have made a green start on hopes of US stimulus hopes. Japanese market was the top gainer with about one percent of gain after reporting a 10 percent rise in exports for May, beating estimates for a 9.7 percent rise.

Back home, stock markets in India showcased high degree of resilience on Tuesday as the benchmark equity indices finished an extremely volatile session on a sanguine note. The benchmark gauges showcased a strong performance by vehemently garnering close to a percentage point and the sharp rally looked even more prominent since it came on a day when equity indices across Asia largely exhibited mixed trends while European counterparts traded on a positive note, but failed to match the fervor with which the Indian bourses soared. With the sharp upmove the frontline indices not only surpassed the psychological 5,100 (Nifty) and 16,800 (Sensex) levels but also regained most part of the ground lost in previous session’s brutal sell-off. After getting off to a flat to positive opening, the markets traded in close proximity with the previous closing levels for most part of morning trades as cues from the Asian space remained sluggish.While the Greek polls ensured that there would be no break-up of the European Union, which capped the downside, however hopes of a concerted EU action to provide stimulus faded after German Chancellor Angela Merkel said that the new Greek government had to meet commitments made to international lenders, limiting the markets’ upside chances. Meanwhile, investors shrugged the disappointing reports showing rating agency Fitch revised Asia's third largest economy’s outlook to Negative from Stable, citing concerns on India’s economic growth potential, inflationary pressures and weak public finances as major challenges. However, the domestic markets showed renewed vigor in afternoon trades following the positive European market opening as sentiments got support from growing speculation that Greece's New Democracy party will come to a coalition agreement with the socialist Pasok party however, Spain's soaring government bond yields limited gains. Moreover, the oil and gas sector remained the top gainer in the space with over two percent gains amid increasing hopes that the government would bite the bullet and hike prices of diesel. Chief Economic Advisor of India Kaushik Basu, who is in favour of partially decontrolling diesel prices, stated that a report on deregulation may finally take shape by next week. Finally, the BSE Sensex gained 153.97 points or 0.92% to settle at 16,859.80, while the S&P CNX Nifty rose by 39.60 points or 0.78% to close at 5,103.85.