Markets to see some consolidation after two consecutive days of rally

The Indian markets extended their rally in last session, adding another over half a percent. There was surge in the high beta rate sensitives’ on expectation that RBI will go for a rate cut in its upcoming policy review. Today, the start is likely to be flat to cautious and markets may consolidate, taking a breather after two days of big gains. Traders may get some support with Prime Minister Manmohan Singh’s statement that the economy has faced a difficult situation in the past year but the government aims to achieve an average growth of eight percent during the 12th Five Year Plan. There will be buzz in the banking stocks after the Reserve Bank of India, coming into action has asked banks to verify whether each and every beneficiary of farm loan waiver qualified under the scheme announced by the government. The action is being taken after Comptroller and Auditor General report highlighted irregularities in over a fifth of the cases audited by it in Rs 52,000-crore farm loan waiver schemes of 2008. The telecom stocks too will see some reaction as the EGoM on telecom decided to seek the Supreme Court’s directions on what to do with unsold spectrum. However, there was no decision on the timeline for the third round of auctions and further reduction in auction prices. Apart from this, there will be lots of scrip specific actions to keep the markets buzzing.

The US markets ended mixed, though rally continued for the Dow and it surged to its new record high after the payroll processor ADP reported that Employers added more jobs last month after hiring 215,000 new workers in January. The report generated some optimism about the release of the Labor Department's monthly employment report on Friday. The Asian markets have made a mixed start with some of the indices trading marginally in red in early session. However, the Japanese Nikkei has strengthened further after yen slumped to its near three week low and exporters gained.

Back home, extending their previous session’s jubilation, Indian frontline equity indices took a quantum leap with both the key benchmarks vehemently re-conquering the psychological 19,250 (Sensex) and 5,800 (Nifty) levels led by significant buying in real-estate, banking and automobile stocks amid optimism that the Reserve Bank of India (RBI) may cut interest rates in March policy to boost growth. The frontline indices throughout the session traded firmly as enthusiastic investors focused on hefty bottom fishing in fundamentally strong equities. Markets gained strength after global rating agency S&P reportedly said that it expects India’s FY14 GDP growth at 6.4% and FY15 figure at 7.2%. S&P also expects a turnaround in Indian corporate sector for mid-FY14. Risk appetite in global markets also remained bullish after US service-industry growth gained momentum, amid speculation that the US Federal Reserve will continue its accommodative monetary policy stance. Back home, sentiments at D-street also got buttressed 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. The strength in the markets also came in on the buzz that 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 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. Support also came in from buying in software counter as stocks like Infosys, TCS, Wipro and HCL Technologies edged higher on positive economic data in the United States, the biggest outsourcing market for the Indian IT firms. Metal stocks remained on the buyers’ radar for the second day in a row after China on March 5, 2013, announced economic growth target of 7.5% for 2013. Moreover, sugar stocks like Rana Sugars, Shree Renuka Sugar, Uttam Sugar and Balrampur Chini Mills all edged higher for second day in a row on reports that the government may consider easing curbs on the sugar sector. Finally, the BSE Sensex gained 109.44 points or 0.57% to settle at 19,252.61, while the CNX Nifty rose by 34.35 points or 0.59% to end at 5,818.60.