Markets likely to get a small gap-up start on supportive global cues

The Indian markets surged again in last session on global optimism and a sluggish start soon turned into a rally taking the benchmarks higher by over a percent. New FMs assurance of maintaining investment attractiveness of the country augured well with the investors sentiments and there was across the board buying. Today, the start is again likely to be good and the markets can make half a percent higher beginning. Now as the Vice Presidential elections are over, the traders will be expecting the government to go forward with the reform measures. The telecom stocks will keep buzzing as the government has finalized the schedule for auctioning of the 2G spectrum which will start on November 12, 2012 and frequencies of spectrum will be assigned to successful bidders by January 30, 2013. The new licence structure will be finalized by October 1, 2012, and submission of application will start on October 2. Traders will also be eyeing the movement of rupee which has climbed to its three week high and its further strengthening could support the markets.

In important result announcements today, Aban Offshore, ABB, Bharti Airtel, Chambal Fertilizers, Goodyear India, GVK Power, Indian Hotels, Jai Corp, Kalyani Steel, Mahindra & Mahindra, Nava Bharat Ventures, Navneet Publications, Pantaloon Retail, Power Finance etc will be among the many to declare their numbers.

The US markets continued rallying on Tuesday with benchmark indices adding about another half a percent to their gains, as a Federal Reserve official called for additional central-bank stimulus and on ECB President Mario Draghi’s comments of restoring calm to the euro zone’s troubled bond markets. The Standard & Poor’s 500-stock index topped 1400 for the first time in three months, while the Nasdaq Composite finished higher than 3000 for the first time since May 3. Most of the Asian markets have made a positive start on better corporate earnings report from US that boosted the outlook for the economy. The Japanese market has surged by over a percent ahead of the Bank of Japan’s two-day policy meeting starting today. Korean market too has advanced over a percent as the Bank of Korea is set to consider cutting rates for a second month.

Back home, strong global cues provided strength to the domestic bourses for second straight day and Indian benchmark indices started the rally from where they ended yesterday. The indices not only climbed over a percent higher in the session but also jumped to the highest levels in four weeks, re-tracing the psychological 5,300 (Nifty) and 17,600 (Sensex) levels. The markets picked up the pace on hopes that the Reserve Bank of India (RBI) will be pressured into lowering interest rates after Finance Minister P Chidambaram said high borrowing costs were burdening consumers. Sentiments also got a boost after provisional data showing continuation of buying of Indian stocks by foreign funds. infrastructure stocks also underpinned the sentiments and traded jubilantly on reports, which state that Union cabinet may introduce the final version of the much awaited Land Acquisition, Rehabilitation and Resettlement Bill in the monsoon session of Parliament. Moreover, media stocks edged higher as about 50% of Mumbai’s TV households have switched to set top boxes, indicating the pace at which digitization of cable services has picked up over the last few months. Rally in global equity markets also supported the sentiments. Back home, the sentiments also remained jubilant after Finance Minister P Chidambaram promised corrective and remedial measures to revive confidence in the sputtering Indian economy. High on the FM’s agenda are fiscal discipline and clarity on controversial tax proposals. However, one has to wait and see what the new FM will deliver in the coming weeks. Moreover, strengthening rupee too underpinned the sentiments. Rupee traded higher by 14 paise at 55.38 per dollar in the late morning trade on sustained selling of dollars from banks and exporters on persistent capital inflows from foreign funds. On the sectoral front, IT stocks witnessed buying in trades after Cognizant Technology Solutions Corp raised its adjusted full-year profit forecast at a time when its Indian peers have been painting a gloomy picture for the rest of year on slowdown in global outsourcing spends. Moreover, rate sensitives’ like Auto, Banking and Realty edged higher by 1-2 percent as the new Finance Minister hinted at a possible interest rate cut. However, PSU oil marketing companies extended recent losses as US crude oil futures ended at its highest in more than two weeks yesterday. The BSE Sensex surged 188.82 points or 1.08% to settle at 17,601.78, while the S&P CNX Nifty soared by 54.15 points or 1.03% to close at 5,336.70.