Markets likely to get a soft-to-cautious start

The Indian markets showed a steady trade in last session and the major indices maintained their early gains till last with hardly any sign of volatility. Today, is a politically important day with the announcement of results for two state elections, markets apart from the street developments will also be eyeing on the outcome of the Gujarat and Himachal poll results. The start today is likely to be cautious as the global cues are weak and the traders might even go for some profit booking in early session. Traders will get some support with government’s stand of stable tax regime and stating that it was banking on better compliance to boost revenues. There is likely to be buzz in the market with market regulator Sebi increasing the minimum deposit that a stock broker should maintain to trade on the bourses up to Rs 50 lakh from Rs 10 lakh earlier. Oil & gas sector is likely to see some action, as the Oil Ministry may seek the opinion of Solicitor General for India on whether RIL and Cairn India can be permitted to drill exploration wells in already producing oil and gas fields.    

The US markets got a halt to their gaining streak on Wednesday, ending near their session’s low as the fiscal cliff worries resurfaced after the talks to avert a year-end fiscal crisis turned sour. President Obama was highly critical of Boehner's proposed "Plan B" legislation, which would extend tax cuts for people making up to $1 million. Most of the Asian markets have made a soft start, tailing the US peers after cracks appeared in fiscal cliff negotiations, while the Japanese market was showing maximum cut of about a percent, as the yen strengthened against all its 16 major counterparts.

Back home, prolonging their previous session’s rally, Indian equity markets snapped the session with a gain of over half a percent. Frontline gauges, throughout the session, traded firmly and re-conquered their crucial 5,900 (Nifty) and 19,450 (Sensex) levels by the end of the trade supported by shares of non-banking financial companies (NBFC) and banking stocks, which edged higher during the trade after the Lok Sabha on Monday passed a banking bill paving way for foreign investments in the sector and establishment of new private banks. The jubilation continued as the Companies Bill too was passed envisaging new set of rules to improve the quality of governance as it prescribes for stringent rule for auditors and strengthens the hands of the Serious Fraud Investigation Office (SFIO). Under the Companies Bill, corporates that make an average profit of at least Rs 5 crore or have a worth exceeding Rs 500 crore, or their turnover exceeds Rs 1,000 crore in the last three years will have to allocate funds for corporate social responsibility. Global cues too supported the sentiments as European counters made a firm opening on Wednesday, with banks posting the biggest advances, as optimism that US policy makers were close to reaching a budget deal. Back home, investors remained hopeful of fastening economic growth on the domestic front, as the government looked determined about the reform measures after the passing of two important bills - banking and companies’ law. Traders also remained optimistic after Planning Commission Deputy Chairman Montek Singh Ahluwalia emphasized on lowering of interest rates to boost economic growth which is beginning to look up after moderating to 5.4 per cent in the first half of the current fiscal. Some relief also came in from currency markets after Indian rupee recovered against US currency on the back of selling of American currency by exporters and banks.  Bull-run continued till end as consistent buying demand persisted among rate-sensitive sectors like Auto and Realty stocks on hopes of policy easing by the Reserve Bank of India in January monetary policy after positive undertone in Tuesday’s review. Finally, the BSE Sensex gained 111.25 points or 0.57% to settle at 19,476.00, while the S&P CNX Nifty rose by 32.80 points or 0.56% to end at 5,929.60.