Markets to make a flat-to-positive start

The Indian markets extended gains on the last trading session and Sensex made a close of crucial over 20k level, the mood remained jubilant led by the oil marketing companies which went on to increase the diesel prices. Today, the start is likely to be flat but positive, though the mood is likely to remain cautious as global rating agency Moody's, despite retaining sovereign credit rating of India at Baa3 its existing level has cautioned that a high fiscal deficit could pull down the growth in the coming years. The coal and power sector is likely to be in limelight as a nine-member ministerial panel headed by Finance Minister P Chidambaram will meet today to finalise the draft of a Bill to set up a coal regulator. Earlier the coal ministry has proposed that pricing power of the commodity should remain with coal producing companies. There is likely to be buzz in the aviation sector too, as the Civil Aviation Minister Ajit Singh has said that the country would handle 336 million air passengers in the next 10 years and 85 million of them would be foreign passengers. There will be lots of important result announcements too, to keep the markets buzzing. HDFC, Alembic Pharma, Geometric, Mastek, NTPC, Praj Inds, Spicejet and Raymond are among the many to announce their numbers today.

The US markets made another mixed closing on Friday though there was upmove on plan to vote on a three-month extension of US borrowing authority. Some of the major Asian markets have made a soft start, led by the Japanese market as the yen climbed against the dollar after hitting its lowest level in more than two years. Though, the Chinese market was marginally in green but it too was showing cautious mood.

Back home, extending their previous session’s jubilation, Indian equity benchmarks snapped the day’s trade in the positive trajectory with a gain of over quarter a percent. Though, benchmarks retreated from its two-year highs on Friday, but ended the session above their psychological 20,000 (Sensex) and 6,050 (Nifty) levels, led by buying activity in oil and gas counters. Shares of companies from oil & gas space moved higher after the oil marketing companies hiked diesel prices last night after getting nod from the government to hike prices from time to time. The sentiments got buttressed after PSU sector stocks rallied after government authorized the National Investment Fund (NIF) to buy shares of public sector enterprises, including banks and insurance companies. The NIF will also be used to re-capitalize PSU banks and public sector insurance companies. The positive momentum of the bourses was also rendered by banking stocks, which beefed up gains on rate cut expectation. Hopes were that government’s decision of partially deregulating diesel prices, a move towards fiscal consolidation, may help ease the apparent hawkish stance of RBI, which puts fiscal consolidation as a pre-condition for rate cuts. Besides, positive global cues too aided the sentiments as European counters edged higher in early deals as miners received support from data out of China which revealed growth in the resource-hungry country quickened at the end of last year. Back home, some support came in from CDMA operators as scrips like Reliance Communication and Tata Teleservices (Maharashtra) edged higher after the Union Cabinet approved reduction in reserve price for the auction of spectrum for CDMA by 50% from the previous reserve price. Interest rate sensitive realty stocks too extended their recent gains as December’s softer headline inflation and decline in exports in December 2012 would bolster expectations that the Reserve Bank of India will shift its attention to supporting economic growth by lowering interest rates at its monetary policy review on January 29, 2013. However, profit-booking in Information Technology (IT), Auto and Health Care (HC) space prevented the further up-tick of the bourses. Appreciation of Indian currency to two and half month high, was working against IT counter. Finally, the BSE Sensex gained 75.01 points or 0.38% to settle at 20,039.04, while the S&P CNX Nifty rose by 25.20 points or 0.42% to end at 6,064.40.