Indian markets likely to get a positive start on supportive global cues

The Indian markets remained in a tight range on Monday and finally ended flat, there was some cautiousness related to government’s stability and the traders remained on sidelines. Today, the start is likely to be in green on supportive global cues and the markets may strengthen further. There will be some buzz in the stocks related to gold business, as the Reserve Bank of India (RBI) has notified a total ban on banks from advancing any loans to its customers for purchasing gold in any form, which includes primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange Traded Funds (ETF) and units of gold mutual funds. There will be some buzz in the telecom equipment sector too, as on the heels of a US Congressional panel raising security issues about Chinese telecom equipment, the Finance Ministry wants the foreign direct investment policy in this segment reviewed. However, the markets are likely to get some support with the statement of C Rangarajan, chairman of Prime Minister’s Economic Advisory Council that government will strive to rein in the fiscal deficit within the revised target of 5.3% of GDP for 2012.

The US markets made a strong start of the holiday shortened week,logging their best one-day rally since September on better-than-expected housing reports and on signs of progress to resolve the fiscal cliff. The Asian markets have made an all green start on positive cues from the US markets. The Japanese market has gained for the fifth consecutive day ahead of the Bank of Japan’s meeting today.

Back home, D-street remained in consolidation mood on Monday after six consecutive sessions of downfall as investors stayed on the sidelines awaiting political developments before making any move as the Winter Session of Parliament kicks off from Nov 22. Congress-led United Progressive Alliance (UPA) government could face its toughest challenge in Parliament during the winter session as the opposition parties is prepared to oppose FDI in retail and corruption-related issues. Mamata Banerjee’s Trinamool Congress may go for no-confidence motion against the UPA government as the session begins. Meanwhile, the Cabinet is also likely to propose setting up of the National Investment Board for expediting clearance to large projects. The psychological 5,550 (Nifty) and 18,300 (Sensex) levels proved as stern support for Indian equity markets. The key gauges displayed listless performance through the day as the aimless benchmarks appeared exhausted and showed only sideways kind of movement in a tight band. Jitters were also witnessed at D-street after reports suggested that amendments to the controversial law against tax avoidance through foreign investments, ‘GAAR’, were been finalized, which after going through Prime Minister Office (PMO) will be reflected in the amended Chapter 10A. Markets, however, in the late trade, witnessed a soothing recovery on the back of appreciation in Indian rupee. Positive global cues too supported the domestic bourses as European stocks traded firmly in the early deals with investors’ sentiment remained upbeat after progress in the fiscal-cliff situation negotiations in the US over the weekend. Back home, some amount of support came in from Auto space as stocks like Bajaj Auto, Maruti Suzuki and M&M witnessed traction on hopes that the demand pick up during the festival sales would boost sales growth during the current month. Telecom stocks like Bharti Airtel and Reliance Communication too supported the sentiments, extending recent gains after the 2G mobile phone spectrum auction received poor response. However, Public sector oil marketing companies like BPCL, HPCL and IOC continued to drag markets lower after the oil ministry said that under-recovery on high speed diesel applicable for second fortnight of November effective November 16, 2012 remains high. Finally, the BSE Sensex rose 29.63 points or 0.16% to settle at 18,339.00, while the S&P CNX Nifty lost 2.65 points or 0.05% to end at 5,571.40.