Markets likely to continue their bull run for yet another day

The Indian markets, supported by good global cues extended their rally for the second straight day in last session, though there was positive PMI data too that bolstered the investors’ sentiments but US cues mainly led the markets higher. Today, the start is likely to be in green, as the global cues are still very optimistic. Marketmen may also take some support from statement of PM’s Economic Advisor Council chairman C Rangarajan, who has said that the current account deficit in 2012-13 is likely to be in the region of the last financial year's level of 4.2% of the GDP and are not a thing to worry as capital inflows through FDI, FII, external commercial borrowings or NRI deposits were adequate to cover the gap. There is likely to be buzz on the street as the market regulator Sebi has cut buyback time to 3 months, now companies coming out with buybacks shouldn’t be allowed to raise capital for two years. There will be some action in the oil & gas sector, as the Rangarajan panel has proposed a new gas pricing formula  and if the recommendations of  the Panel find their way then the domestically produced gas price in the country would hover around $7-8/mmBtu at the current rate. Power sector too will be in limelight after the Coal Ministry reported that 35 power firms have so far entered into fuel supply pacts with Coal India.

The US markets rallied on Wednesday, the first trading day of the year  after a last-minute deal to avert the "fiscal cliff" of tax hikes and spending cuts that threatened to derail the economy. All the major indices surged by an average over two and half a percent for the day. The Asian markets have continued their rally mood with most of them trading trading higher by about half a percent.

Back home, extending their previous session’s rally, Indian frontline equity indices took a quantum leap on the second trading session of 2013 by Sensex vehemently rallying to re-conquer the psychological 19,700 levels while, Nifty ended tad below its crucial 6,000 level. The benchmarks not only propped up by over half a percent but also underpinned them to hit the highest levels Since January 7, 2011. The frontline indices throughout the session traded firmly as enthusiastic investors focused on hefty bottom fishing in fundamentally strong equities. Some strength also came in after Indian rupee appreciated by 36 paise to trade at fresh two-week high of Rs 54.32 against the US dollar at the Interbank Foreign Exchange on increased dollar selling by exporters and banks amid sustained foreign capital inflows. The global cues too remained jubilant as Asian and European markets cheered the developments in the US after a major risk for investors appeared to have receded for now. Back home, across the board buying was evident in the session as manufacturing activity surged to a six-month high in December, boosted by strong factory output and a spike in new orders, both of which hit their highest levels since June. The HSBC Markit India Manufacturing PMI, which gauges the business activity of India’s factories, jumped to 54.7 in December from 53.7 in November, its biggest monthly rise since January 2012. Market mood also got some boost after the banking counter garnered traction in the session amid hopes of monetary easing by the Reserve Bank, while the decline in government bond yields for the second day in a row also helped most banking names in spicing up. Some amount of supported also came in from Auto space which gained about a percent as companies like Hero MotoCorp, Atul Auto and Bajaj Auto registered decent gains in December sales. Bajaj Auto has sold 3,43,946 units in passing month as compared to 3,05,690 units in the same month last year while, Atul Auto’s sales increased by 20.51 percent to 2,844 vehicles in December 2012 as compared to 2,360 vehicles sold in December 2011.Sentiments also got support after jewellery stocks like Tribhovandas Bhimji Zaveri, Thangamayil Jewellery and PC Jeweller traded jubilantly as government slashed the import tariff value of gold and silver to $ 539 per 10 gm and $979 per kg, respectively. PSU stocks too traded with traction after the government initiated the process of appointing merchant bankers for managing the 12.5 per cent stake sale in Rashtriya Chemicals and Fertilisers. Finally, the BSE Sensex gained 133.43 points or 0.68% to settle at 19714.24, while the S&P CNX Nifty rose by 42.40 points or 0.71% to end at 5,993.25.