Markets likely to extend gains on supportive global cues

The Indian markets made a good bounce back, surging by around one and half a percent in last session, there was good bit of short covering at lower levels and a broad based buying was seen in the market. Today, the start is likely to remain in positive terrain and the markets are likely to add strength in their gains on cheerful global cues. Traders are also likely to get some support with Chief economic adviser to the government Raghuram Rajan’s statement that there are signs of economic recovery as inflation is on the decline and exports are looking up. There will be some buzz in the telecom sector as the Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram is scheduled to meet today to discuss the third round of spectrum auction. The EGoM would take a call on the number of telecom circles in which spectrum would be auctioned, and there will be some expectation of reduction in spectrum prices. Also, there will be buzz in the market as regulator Securities and Exchange Board of India has formed a panel to review insider trading rules to curb the rising menace of the illegal practice. Meanwhile, Mauritius has promised to address India's concerns on possible misuse of tax avoidance treaty between the two countries, while ensuring its commercial viability, on mutually acceptable terms.

The US markets surged in last session on getting some upbeat economic data from across the globe. Dow and Nasdaq ended at their record high on a report that US service sector grew at a faster pace than expected. European service sector activity too improved, while outgoing Chinese Premier Wen Jiabao promised increased fiscal spending. Asian markets have made a positive start tailing the US markets. Japanese index has taken the lead as exporters moved higher on optimistic Services data from US.

Back home, Buoyed by firm global cues, key domestic benchmarks showcased an enthusiastic performance on Tuesday, recovering from the multi-month lows suffered in last few sessions, by rallying close to one and a half percentage points and breaking a lot of psychological levels in their northbound journey. There appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt of fundamentally strong but oversold stocks. Frontline indices managed to finish the session around their intraday high and settled comfortably above 5,750 (Nifty) and 19,100 (Sensex) levels as investors took to hefty across the board buying. The positive global cues mainly boosted the morale of the markets as most of the Asian equity indices ended the session in the green terrain on reports that the US Federal Reserve will continue with its bond-buying plan to support growth in US while China maintained 7.5 percent growth target for fiscal year 2013. Back home, sentiment continued to remain jubilant through the trade after global rating agency, Moody’s, applauded Finance Minister P Chidambaram’s Budget saying that it pursues realistic fiscal consolidation path and is credit positive for the country’s sovereign rating. Giving thumbs up to the Union Budget 2013, Moody’s said that FY14 Budget is proposed to bring down the fiscal deficit to 4.8 percent of the GDP from 5.2 percent in the revised estimates for the current financial year. Also, Finance Minister P Chidambaram’s statement that fiscal deficit in the current financial year is likely to be less than the provisional figure of 5.2 percent announced in the national budget last week, supported the positive sentiment. Buying in software counter too strengthened the sentiments. Stocks like Infosys, TCS, Wipro and HCL Tech edged higher after the Indian rupee hit the lowest level in nearly two months on March 4, 2013. The unit dropped earlier to a low of 55.15, the weakest since January 8, 2013. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. Finally, the BSE Sensex surged 265.21 points or 1.40% to settle at 19,143.17, while the CNX Nifty climbed by 85.75 points or 1.50% to end at 5,784.25.