Markets likely to extend previous session’s rally with optimistic start

Indian markets ended sharply higher on Monday driven by financial majors HDFC Bank and HDFC after they announced a merger deal, in what would become a mega banking entity in India. Today, the markets are likely to continue their previous session’s rally with optimistic start following broadly positive global cues. Traders may take note of a report that the government is committed to supplying fertilisers at affordable prices to farmers with required subsidies despite rising international market rates due to the Russia-Ukraine conflict, huge procurements by China and other global factors, which may push the annual fertiliser subsidy to up to Rs 2 lakh crore in the current financial year. However, rising petrol and diesel prices may dent sentiments in markets. As per a private report, petrol and diesel prices have been hiked by 80 paise a litre each on April 05, taking the total increase in the last two weeks to Rs 9.20 per litre. This is the 13th increase in prices in the last 15 days since the end of a four-and-half-month long hiatus in rate revision. Traders may be concerned as the government data showed that India’s trade deficit rose 87.5 percent to $192.41 billion in 2021-22 as against $ 102.63 billion in the previous year. Meanwhile, to curb possible misuse of Power of Attorney (PoA) given by clients to stock brokers, Sebi came out with fresh guidelines wherein execution of a new document will be made compulsory for transfer of securities towards deliveries and settlements. There will be some buzz in the sugar industry stocks as industry body ISMA said India’s sugar export may touch 85 lakh tonne in the ongoing 2021-22 marketing year ending September. It added while the country has contracted 72 lakh tonne of sugar export, the physical exports have been around 56-57 lakh tonne till March-end this year.

The US markets ended higher on Monday led by tech shares, mainly Twitter after Elon Musk revealed holding a 9 per cent stake in the social media giant. Asian markets are trading mixed on Tuesday as investors look ahead to the Reserve Bank of Australia’s latest rate decision.

Back home, extending their winning streak to second straight session, Indian equity Benchmarks showcased an enthusiastic performance on Monday, by rallying over two percent in the session and settling above the psychological 18,050 (Nifty) and 60,600 (Sensex) levels. The key benchmark indices opened on an upbeat note boosted by intense buying in banking and financial stocks after the announcement of merger between HDFC and HDFC Bank.  Investors’ morale was also boosted with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India is on the cusp of a major economic recovery and talks of possible stagflation are 'overhyped' as a strong economic foundation is being laid with the reforms carried out by the government over the last seven years. Traders also got some encouragement with the Commerce and Industry Ministry in its latest data has indicated that India's merchandise exports spurt to a record high of $418 billion in the 2021-22 fiscal on higher shipments of petroleum products, engineering goods, gem and jewellery and chemicals. Buying got intensified in second half of the session, taking support from the finance ministry’s statement that Goods and Services Tax (GST) collection soared to an all-time high of Rs 1.42 lakh crore in March 2022 as the fiscal year-end frenzy to meet targets saw strong sales and crackdown on evasions brought in more taxes. The GST collection rose 15 percent annually in March. Some solace also came after Finance Minister Nirmala Sitharaman’s statement that India continues to remain the highest receiver of the FDI, and the Indian retail investors have created the capacity to absorb the shock due to outflow of foreign funds from the country’s stock markets. Traders overlooked report indicated that Indian manufacturing activity eased in the month of March, on the account of slower expansions in factory orders and production as well as a renewed decline in new export orders. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 54.0 in March from 54.9 in February. Finally, the BSE Sensex rose 1335.05 points or 2.25% to 60,611.74 and the CNX Nifty was up by 382.95 points or 2.17% to 18,053.40.