Markets likely to extend the gaining momentum; Infosys numbers and IIP data eyed

The Indian markets made a bounce back in last session on Finance Minister’s assurance that in next 24 months government will be taking lots of measures to avoid any kind of rating downgrade. Today, the start is likely to be in green and the markets may extend their gaining momentum on supportive global cues. There is big day for the markets, as with the announcement of the Infosys numbers, official Q2 earnings season will kick start. Though traders are expecting a marginal rise in profit of around 4-4.5% in the IT bellwether numbers and the sales may increase by 3-3.5% for the second quarter. However, all eyes will be on the annual guidance and if it lowers it considerably, then the stock and the whole IT sector may take a beating. There is another important event that will draw investors’ attention, the announcement of IIP data for August and economists are expecting it to stabilize near one percent mark after posting a negligible 0.1 percent growth in July, as the core sector data too had came weak. The export related stocks are likely to remain under pressure after trade deficit widened to its 11 months high.

The US markets closed flat with a negative bias on Thursday, though the jobless claims dropped to its lowest level since 2008 that suggested hiring may be picking up but the decline in the technology sector weighed down due to a slide in Apple shares. Also, the Census Bureau reported that the US trade deficit widened to $44.22 billion in August from $42.47 billion in July. The Asian markets have made an all green start on the last trading day of the week on good data from US and as China and Japan agreed to hold talks over a territorial dispute that has disrupted trade.

Back home, it turned out to be a noteworthy session for the Indian equity markets as market bulls vehemently fought back, in the late trade, supported by Finance Minister P Chidambaram’s comment that there is no serious threat of a ratings downgrade. He also stated that there would be lot of action on the reforms front in the next 24 months, the timeline provided by the S&P. The frontline indices, after exhibiting choppy trade for most part of the day’s trade, finally showed enthusiasm to end the session near intraday highs, reclaiming the psychological 18,800 (Sensex) and 5,700 (Nifty) bastions. The gauges surged despite exports falling for the fifth consecutive month. September trade deficit rose to its widest in 11 months. The indices also got strength as Realty and power shares witnessed buying at lower levels after witnessing a sharp sell-off in the previous sessions. The main support to the Indian bourses came from European counters, which provided the required confidence to the investors with all the European markets witnessing bounce back after opening lower following Spain’s downgrade. Back home, the undertone in the Indian markets remained sanguine, as investors awaited for the next round of economic reforms from the UPA, while bracing for the latest batch of corporate results. All eyes will be on the earnings from IT titan Infosys and housing finance major HDFC on Oct 12. Investors will also keep an eye on the IIP data and CPI inflation, both of which will release on October 12. Strengthening rupee too aided the sentiments. The Indian rupee appreciated 26.50 paise to 52.78 against the US dollar at the time of equity market closing. Some amount of support also came in after Cabinet Committee on Economic Affairs (CCEA) agreed to hike the prices of urea-based fertilizers by Rs 50 per tonne, thereby reducing government’s fertilizer subsidy bill, estimated to touch Rs 65,000 crore this fiscal year. Buying in FMCG counters too aided the sentiments as stocks like, HUL, Dabur India and Marico edged higher on favourable outlook for Rabi or winter crop following wide-spread rains in August and September. Finally, the BSE Sensex gained 173.65 points or 0.93% to settle at 18,804.75 while the S&P CNX Nifty rose by 55.90 points or 0.99% to end at 5,708.05.