Markets to extend the gains with a flat-to-positive start

The Indian markets surged in last session to near their two years high. as the Inflation figures cooled down in the month of December bolstering hopes of rate cut in the RBI’s upcoming monetary policy review. Today, the start is likely to be mildly positive and Sensex might aim to touch the 20k level but some profit booking after the last session’s rally too cannot be denied. Deferred implementation of the controversial General Anti-Avoidance Rules (GAAR) by two years to April 2016 will keep the spirit high on the streets. Planning Commission Deputy Chairman Montek Singh Ahluwalia too has said that postponement of the implementation of the GAAR for a further two years will help improve the investment climate. Traders are likely to get some support from the assessment of the Organisation for Economic Cooperation and Development (OECD) that Indian and Chinese economies are seeing encouraging signs of turnaround, while the situation is improving in most of the developed world. There will be some buzz in the sugar sector as the government has liberalised the procedure for export of pharmaceutical grade and specialty sugar.  IT sector will remain in upbeat mood as after good results of Infosys, Tata Consultancy Services too has posted a 26.65 per cent rise in net profit at Rs 3,550 crore, beating street expectations. There will be other lots of important result announcements like Axis Bank, Bajaj Finserv, DCB, NIIT Tech etc to keep the markets buzzing.

The US markets made a mixed closing on the start of new week, there was concerns that earnings results will disappoint as the quarterly corporate reporting season continues.Weakness in Apple shares dragged the S&P from its near five-year high. Most of the Asian markets have made a positive start supported by the surge in the Japanese market as the yen extended losses, boosting the earnings outlook for Japanese exporters.

Back home, Boisterous benchmarks showcased an enthusiastic performance on Monday by rallying close to one and a half percentage points and breaking many psychological levels in their northbound journey. There appeared not even an iota of profit booking throughout the session as the benchmarks fervently gained strength to strength as investors continued their hunt for fundamentally strong but oversold stocks. Frontline indices managed to finish the session around highest levels, settling above 6,000 (Nifty) and 19,900 (Sensex) levels as investors went for hefty across the board buying. Sentiments got bolstered on hopes for a interest rates cut by RBI in this month to boost economy that is set to post its slowest growth in a decade, as the wholesale price index (WPI), India’s main inflation gauge, unexpectedly eased at 7.18 percent for the month of December as compared to 7.24 percent (Provisional) for the previous month and 7.74 percent during the corresponding month of the previous year. Investors shrugged off ugly CPI Inflation numbers which rose to 10.56% in December, faster than the 9.9 percent gain seen in November. Bourses mainly turbo-drove in last leg of trade post Finance Minister P Chidambaram’s statement that the government has deferred implementation of controversial rules on tax avoidance to April, 2016, a move which is likely to ease foreign investor sentiments, who are opposed to the controversial rule. The finance ministry had earlier said that it would implement GAAR (General Anti-Avoidance Rules) from April, 2014. Global cues too supported the sentiments as European counters traded jubilantly in early deals after the region’s improving economic growth outlook and declining prospects of further monetary easing bolstered demand. Back home, rally in software and technology stocks mainly bolstered the sentiments as stocks like, Infosys, TCS, HCL Tech and Tech Mahindra extended their previous session’s gains after sector bellwether Infosys on January 11, 2013 surprised the street with better-than-expected results for the third quarter ended December 2012 (Q3) and also raised its full year guidance. Support also came in from rate sensitive realty sector which remained the top gainer among the sectors, as December’s softer headline inflation print along with recent data showing contraction in industrial production in November 2012 and decline in exports in December 2012 bolstered expectations that Reserve Bank of India will shift its attention to supporting economic growth by lowering interest rates at its monetary policy review on 29 January 2013. Finally, the BSE Sensex surged 242.77 points or 1.23% to settle at 19906.41, while the S&P CNX Nifty climbed by 72.75 points or 1.22% to end at 6,024.05.