Markets to make a positive start on good global cues

The Indian markets despite some choppiness managed to gain for another day. The concern of weak monsoon took away most of the gains in the last. Today, the start is likely to be in green, though volatility is likely to persist due to the expiry of F&O series for June. Also, the concern of monsoon will be there as it has been reported that the monsoon season got worst start in India in three years, threatening crops from rice to sugar cane, putting pressure on the inflation scenario. However, the Commerce and Industry Minister Anand Sharma, has said that the government had not lost direction or initiative and will be taking different measures. Traders are also likely to get encouraged, as after taking charge of the Finance portfolio from Pranab Mukherjee, Prime Minister Manmohan Singh too has sought to rev up the country’s economy to a higher gear. Manmohan Singh has encapsulated the numerous problems which were afflicting the economy and the steps that need to be taken to overcome the crisis situation.

The US markets ended higher on Wednesday on getting upbeat economic data and rising oil prices. Though, the traders were a bit hesitant in opening bet ahead of the Euro zone leaders’ summit but moved higher after the data showed demand for long-lasting US manufactured goods rose more than expected in May and the index of pending home resales climbed. The Asian markets have made a good start tailing the overnight gains in the US markets. Though, the mood of the investors in the region remains sanguine but traders are also cautious awaiting the start of a summit on Europe’s debt crisis. Japanese market is trading higher by over a percent in early trade supported by the gains in commodity stocks.

Back home, stock markets in India snapped a choppy session on a positive note on the penultimate day of June series Futures and Options contract expiry, as the frontline equity indices settled with gains of around one third of a percent. Despite trading with good gains for most part of the day, the bourses failed to build on the impetus after reports suggested that likelihood of good monsoon this season is fast receding. While there is already a 23 percent deficiency in rainfall, Northern and western parts of India will have to wait for at least another eight days for a major revival in the monsoon, a development which could hurt India’s agrarian economy in a big way. However, the markets managed to extend the uptrend for second straight session and settled just below the psychological 17,000 (Sensex) and 5,150 (Nifty) levels. Domestic sentiments were supported by SEBI’s recent decision to relax rules that govern Offer for Sale (OFS) and Institutional Placement Programme (IPP) mechanisms which will aid firms to smoothly conduct disinvestment process and also abide by the public shareholding regulations. Moreover, investors also remained in positive mood following the resignation of Pranab Mukherjee as hopes that the government would push for investments in the infrastructure sector rose after Prime Minister Manmohan Singh took over the charge of the Finance Ministry. But, cues from the money market remained subdued as the Indian rupee, despite recent measures announced by RBI, extended its streak of depreciation against the dollar as it rose above 57.10 mark against the US dollar on sustained American greenback demand, undermining investor sentiments and raising concerns over slowing economic activity and drying inflows from foreign funds. On the BSE sectoral space, the Metal counter soared over one and half a percent and remained the top gainer in the space. The Power pocket surged over a percent led by power generation and distribution company shares after three Delhi-based private distribution companies hiked the price of power for domestic use by a steep 24.15 percent after getting the go-ahead from the Delhi Electricity Regulatory Commission while the price of power for commercial use also was hiked by 19.5 percent. However, investors were seen booking profits from rate sensitive Auto counter which sank over half a percent and capped the upside chances for the benchmarks. Finally, the BSE Sensex gained 61.18 points or 0.36% to settle at 16,967.76, while the S&P CNX Nifty rose by 21.10 points or 0.41% to close at 5,141.90.