Markets likely to extend the last session gains with a positive start

The Indian markets made a good bounce back in last session with major indices surging by over a percent. There was good buying in beaten down, commodity, IT and tech shares that led the markets higher. Today, the start is likely to be good and the Nifty may regain 5150 mark in early trade on global optimism. However, traders will be eyeing the first-quarter monetary policy review to be announced tomorrow, there are hopes that RBI governor Duvvuri Subbarao will spring a pleasant surprise in the form of a rate cut. Though, the monsoon worries are likely to keep the mood cautious as Union Agriculture Minister Sharad Pawar has said that the country may face a “serious” situation if it does not rain in the next two months. Even the industry body CII has expressed concern over the impact of the deficient rainfall on the broader economy, at a time when there is already a sharp slowdown on account of various domestic and global factors. Delays in key economic reforms too are likely to remain a cause of concern for the markets.

The result season too is on its peak and there will be lots of important result announcements to keep the markets buzzing. Allahabad Bank, BOB, Corporation Bank, Havells India, IOB, J K Tyre will be among the many to announce their numbers today.

The US markets closed higher on Friday and the major indices surged to over their two months high. There was optimism about some stimulus from the US and European central banks. Most of the Asian markets have made a green start with many of the indices trading higher by over half a percent as the results of some top companies came good and hopes strengthened that European policy makers will support the euro.

Back home, bulls strike back on Friday, after witnessing steep fall in previous session. Markets traded jubilantly throughout the session and garnered gain of over a percentage point with Sensex regaining its psychological 16,800 mark while, Nifty ending a tad below its crucial 5,100 bastion. The sharp rally was triggered by favourable comments from ECB president Mario Draghi, who yesterday pledged support for the common euro currency amid growing worries about the European credit crisis and its impact on the global economy. Draghi’s remarks have set-off speculation about fresh monetary easing measures from the ECB, including another round of LTRO. A couple of positive economic data out of the US also aided the optimism across global markets. Touching their high point of the day’s trade, benchmarks trimmed some of their gains triggered by sharp reversal in the European indices in intraday trade, after a positive opening. However, markets traded firmly till end supported by metal space, which remained the top gainer after copper prices edged higher in the international market on July 27, 2012. Three-month copper on the London Metal Exchange traded at $7,502 a tonne, up 0.43% and adding to small gains seen in the prior session. Shares of Tata Steel, Hindalco Industries, Sesa Goa and JSW Steel edged higher in the trade. The FMCG sector too provided the strength to the benchmarks. The gains in the space were aided by strong set of Q1 numbers reported by ITC. In addition, HUL, Dabur and Colgate-Palmolive, also registered gains of 112.26%, 30.54% and 16.90% earlier, in its net profit for Q1FY13. Moreover, private lender ICICI Bank too supported the sentiments after reporting better-than-estimated Q1 numbers. In contrast, PSU banker Punjab National Bank slumped to the bottom of the Nifty index, falling 5%. The lender reported higher provisioning for bad loans, even as non-performing assets rose over last year. Finally, the BSE Sensex surged 199.37 points or 1.20% to settle at 16,839.19, while the S&P CNX Nifty soared by 56.85 points or 1.13 to close at 5,099.85.