Markets likely to start on a positive note

The Indian markets consolidated in last session after a big rally and the rate sensitives' suffered some profit booking. Today, the start is likely to be in green supported by positive regional cues. Traders will also be concentrating on the development in monsoon, however allying apprehensions over the possibility of deficit rainfall this monsoon season, Planning Commission Deputy Chairman Montek Singh Ahluwalia had said that it is too early to reach the conclusion that something adverse is happening. Telecom sector too will be in limelight as just few days after his appointment as the Chairperson of telecom EGoM, Agriculture Minister Sharad Pawar recused himself from heading it. Meanwhile, the investors are likely to get some encouragement as Corporate Affairs Minister M Veerappa Moily has said that the economy would be back on track in the next one or two months. He further said that the government was taking all necessary steps to revive growth and was planning to bring in a national business index, which would be based on the broad economic parameters.

The US markets made a mixed closing on Monday on getting weak economic data, the ISM manufacturing index contracted for the first time since July 2009, there were some other disappointing reports from Europe and China. However, the markets remained resilient expecting that Fed would intervene to boost the economy with more easy money policies. The Asian markets have made a positive start on expectations that different central banks may ease monetary policy to spur economic growth. Japanese market was up by over half a percent, supported by gain in exporters on expectations that shrinking US manufacturing may encourage the Federal Reserve to ease monetary policy.

Back home, stock markets in India commenced the first week of June month on a lackadaisical note as the benchmark equity indices hardly budged from their previous closing levels on Monday. The key indices oscillated in an extremely tight range through the session as market participants remained on the sidelines lacking conviction amid the persistent worries over global economic growth prospects. Investors chose to consolidate their positions around previous closing levels, a session after witnessing markets’ vehement rally of over two and half a percentage points, which had helped the bourses not only extend their gaining streak for the fourth successive session but also soared to highest levels in more than two-months. The key equity gauges continued to move in a sideways direction around the psychological 5,250 (Nifty) and 17,400 (Sensex) levels, lacking any significant upside triggers as investors indulged only in stock specific activities. The quiet performance of domestic indices appeared even shoddier because of the fact that major stock markets across the globe climbed higher amid the tentative improvement in investors’ risk appetite. On the domestic front, the investors at large overlooked India’s manufacturing PMI data which expanded to 55 in June, 2012 as against 54.8 in the previous month of 2012, helped mainly by product quality improvement and stronger demand. The survey underscored that India’s industrial activity intensified in June and factories hired at the fastest rate in more than two years. However, it also highlighted that the inflationary pressure and gloomy global scenario posed challenges to manufacturing growth. The downside for the markets was also capped by the supportive cues from money market where Indian rupee extended its streak of appreciation and traded at sub 56 levels against the US dollar. On the BSE sectoral space, profit booking was largely evident in the defensive FMCG sector, which got pummeled by over two percent and remained the top laggard in the space. The rate sensitive Auto counter too slipped lower, falling over half a percent after majors including Tata Motors and Bajaj Auto reported weaker than expected monthly sales numbers. Finally, the BSE Sensex lost 31.00 points or 0.18% to settle at 17398.98, while the S&P CNX Nifty declined by 0.30 points or 0.01% to close at 5,278.60.