Markets to extend gains with a positive start on supportive global cues

The Indian markets after a volatile trade ended with modest gains in the last session, there was some result reaction and profit booking in select blue chips that capped the initial gains of the market. Today, the start is likely to be in green tailing positive global cues. The PSU oil companies may cheer with Finance Minister P Chidambaram’s statement signaling end to cheap fuel. He has said that the current pricing system of petroleum product is not conducive for economic policy decisions. There will be buzz in the India Inc., as the Reserve Bank of India has eased norms for priority sector lending by banks and also expanded the scope for distributing loans to agriculture and weaker sections of the society. The telecom stocks too will be watched as the Empowered Group of Ministers will be meeting today to take a final decision on re-farming spectrum in the 900 Mhz frequency band. The cement sector too will be buzzing, as the two major companies ACC and Ambuja will be announcing their second quarter numbers.

There will be lots of other important result announcements too. D B Corp, Dish TV India, Gujarat NRE Coke, JK Paper, Mahindra Lifespace, Hindustan Zinc, Praj Inds, Zee News are among the many to announce their numbers today.

The US markets made a flat closing on Wednesday after a day of rally; there were some disappointment from the earnings front that overshadowed good housing starts data. IT bellwether Intel gave a weak fourth-quarter revenue outlook while IBM posted a weaker than expected third-quarter revenue. Most of the Asian markets have made a green start, encouraged by the Chinese Premier’s statement ahead of report on gross domestic product that China’s economy was relatively good.

Back home, volatility witnessed in the second half of the trade washed away significant gains of D-street, leading to lackadaisical close of Indian equity markets despite a promising start. Even though, the barometer gauges managed to close above their psychological 5650 (Nifty) and 18,600 (Sensex) levels on the back of some value buying activities. Though, the frontline equity indices’ gains of about quarter percent appeared dismal compared to the notable gains amassed by their peers in Asian region. The domestic bourses, after the initial rally, lost their direction as investors booked their profit at higher levels. Sentiments got some support after the country’s fourth largest software services provider HCL Technologies beating market expectations with a 78 percent rise in Q1 consolidated net profit helped by higher contract wins. Consolidated net profit rose to Rs 885 crore compared to Rs 497 crore on a year-on-year basis. However, the stock of the company ended lower with a cut of over half a percent on profit booking. Karnataka Bank too squeezed out gains of over half a percent after the Mangalore-based private sector lender’s net profit rose nearly 186 percent year-on-year to Rs 117.2 crore in the second quarter of financial year 2012-13. Supportive cues from Asian markets provided the much needed support to local markets in first half and most of the regional peers snapped the session in the green terrain on the back of strong US earnings reports that brightened investors’ mood. Back home, some amount of support came in from Aviation sector as stocks of Spicejet and Kingfisher rallied after the civil aviation ministry directed the Airports Authority of India to abolish airport development fee at Mumbai and Delhi airports. Meanwhile, Auto stocks too aided the sentiments as stocks like Maruti Suzuki, M&M, Force motors, Hero MotoCorp, Bajaj Auto and TVS Motor edged higher on expectations of higher sales during upcoming festival season. However, market gains remained capped after stocks related to sugar sector tumbled after the Ministry of Consumer Affairs, Food & Public Distribution said it has asked sugar mills to ensure the release of entire quota for the festival season. Selling in Metal shares like SAIL, Bhushan Steel, Tata Steel, Sterlite Industries and Jindal Steel & Power too dampened the sentiments. Finally, the BSE Sensex gained 33.07 points or 0.18% to settle at 18610.77, while the S&P CNX Nifty rose by 12.25 points or 0.22% to end at 5,660.25.