Markets likely to extend the gains with a positive start

The Indian markets started the upbeat trend in the equity markets after surging in second half of last session to post gain of around half a percent. The hopes of global leaders taking steps to boost economy supported the metal and realty stocks. Today, the start is likely to be in green, tailing the cheerful global cues. Traders will be eyeing the President poll today, though UPA’s presidential candidate Pranab Mukherjee’s win is imminent as per numbers are concerned but market is eyeing some reforms to take place after the election. It is expected that apart from hiking diesel prices the government is planning to quickly put in place a mechanism to cap the number of subsidised LPG cylinders for a household to 6-8 per year and that may suuport the PSU OMCs. The telecom stocks too may remain in lime light as the ministerial panel on spectrum is expected to finalize on Friday its much awaited recommendations on spectrum reserve price and usage charges. There will be buzz from individual stocks too, apart from some major result announcements, Maruti Suzuki’s share movement will be watched after violence erupted at its Maneser plant, resulting in dozens of injuries, damaged property and forcing the company to halt output at the plant.

The US markets extended their rally for the second day on Wednesday after better than expected corporate earnings from bellwethers like Intel and Honeywell defied the market’s worst fears. Markets were also boosted by encouraging housing starts data, groundbreaking on US homes rose in June to its fastest pace in over three years. The Asian markets have made an all green start on better data from US, recovery in housing sector has boosted the outlook of companies engaged in US. The Hong Kong market has taken the lead, surging by over a percent.

Back home, after witnessing consolidation and downtrend in last few sessions, domestic bourses added some strength garnering gain of about half a percent on Wednesday. Though, benchmarks traded cautiously near their last closing for most part of the day’s trade but, pull back in last leg of trade helped local indices to regain their crucial 5,200 (Nifty) and 17,150 (Sensex) mark. The recovery was mostly followed by trend reversal in Power segment as the sector is expecting some supportive decisions from the Cabinet meeting scheduled for tomorrow. Moreover, the Centre hinted that it is considering a bailout for state electricity distributors that are running in losses and are unable to pay for new supplies as they sell power below cost and also lose to pilferage. Moreover, shares of power equipment manufacturer surged on report that Cabinet is expected to take up the Power ministry’s proposal to impose 21 percent duty on imported power equipments. The sentiments also got bolstered with Auto space which after trading in the red for most part of the day, turned in the positive zone buoyed by Bajaj Auto’ decent Q1 numbers. The auto major reported in-line results for the first quarter, registering a marginal rise of 1.03% in its net profit at Rs 718.39 crore for the quarter under review as compared to Rs 711.06 crore for the same quarter in the previous year. Annual rate of inflation, based on the consumer prices index (CPI) in India, eased in the month of June to 10.02 percent as compared to 10.36 percent for the previous month of April 2012, adding to bourses vigor. Sentiments also got some boost after shares of organized retailers like Provogue (India), Shoppers Stop, Pantaloon Retail, Koutons Retail India and Trent edged higher on reports that the government is planning to persuade the chief ministers of different states to back the entry of foreign supermarket chains. However, the gains remained capped as nervousness prevailed over monsoon’s weak progress in the crucial July month. Finally, the BSE Sensex gained 79.71 points or 0.47% to settle at 17,185.01, while the S&P CNX Nifty rose by 23.45 points or 0.45% to close at 5,216.30.