Markets likely to make a cautious start of the last trading day of week

The Indian markets added another half a percent to their gains for the week on Thursday, on optimism that government will go forward with the different policy reforms after the Presidential election. Technology stocks bounced back on good outlook forecast from their global counterparts. Today, the start is likely to be cautious as the global concerns have resurfaced and traders may opt to remain on sideline going for a weekend. Today, the domestic power equipment makers are likely to rejoice as Union cabinet has decided to slap 21% duty on imports of power equipment, mainly to protect domestic companies from cheap Chinese shipments. There will be some buzz in PSU sector too, as the cabinet has also approved the sale of 10.82% of its stake in Steel Authority of India, which may fetch the exchequer over Rs 4,000 crore. The telecom stocks too will be watched as the ministerial panel on spectrum is expected to finalize its much awaited recommendations on spectrum reserve price and usage charges. Meanwhile, it has been reported that the DoT may tell the high-powered inter-ministerial panel that reserve price for airwaves can be reduced by about Rs 1000 crore for every 1% increase in revenue share.

Sugar stocks too will be buzzing after the cabinet approved a 17% hike in sugarcane price that mills pay to farmers to Rs 170 per quintal for 2012-13.There will be lots of result announcements including the earnings of market heavy weight Reliance Industries slated to be announced after market hours.

The US markets continued their gaining streak on Thursday and the S&P reached to its highest level since early May on the back of strong earnings and outlook from technology companies', which overshadowed weak economic data of rise in unemployment benefit claims. The Asian markets have made a mixed start with some of the indices trading lower by quarter-to-half a percent in early trade as China pledged to keep curbs on its property market and euro declined amid concern Europe’s debt crisis is dragging on global growth.

Back home, prolonging their northward journey for second day in a row, domestic bourses garnered over half a percent on Thursday with benchmarks snapping the session near their crucial 5,250 (Nifty) and 17,300 (Sensex) levels. Though, the major indices traded in a tight band throughout the day but the sentiment remained upbeat on expectations of some reform-oriented measures from the Government after the completion of Presidential election this week. A hike in diesel prices and revival of the FDI in multi-brand retail are among the few major reforms that the markets are looking forward from the Prime Minister and his team. Strengthening rupee too added momentum and traded firmly during the session on higher dollar selling by foreign banks and exporters. The optimism got bolstered by rally in PSU oil marketing companies which rose on buzz that apart from hiking diesel prices, the government is planning to quickly put in place a mechanism to cap the number of subsidized LPG cylinders for a household to 6-8 per year while, aviation stocks also took off higher after Union Commerce minister Anand Sharma said that the government plans to soon allow foreign carriers to invest up to 49% in Indian airlines. Bucking the trend, major telecom stocks like Bharti Airtel, Idea Cellular and RCom tumbled by 1.5-4 percent as the Empowered Group of Ministers (EGoM) on telecom deferred a decision, till later this week, on the contentious issue of a reserve price for the re-auction of 2G spectrum.Rally in domestic benchmarks also got supported by positive global cues. The strength to the bourses were mainly provided by IT space as it remained the top gainer on sectoral front and stocks like Infosys, Wipro, TCS, HCL Technologies, MphasiS, Tech Mahindra and Oracle Financial Services Software edged higher as US-based IBM reported better-than-expected earnings after trading hours in the US. Some gains of the markets got capped as monsoon concern still lingered for the investors. India’s monsoon rains continue to cause concern, with sowing of pulses and rice behind schedule and rainfall still 22% below average for the year. While, disappointing earnings reported by the Hero Motocorp, Dr Reddy’S Laboratories and Kotak Mahindra Bank too dampened the sentiments a bit. Finally, the BSE Sensex gained 93.84 points or 0.55% to settle at 17,278.85, while the S&P CNX Nifty rose by 26.40 points or 0.51% to close at 5,242.70.