Markets to get a positive start on optimistic global cues

The Indian markets showed unexpected strength in the last session with benchmarks gaining humongous gains on rate cut hopes. Today, the start is likely to be in green as the global cues have soothed while on the domestic front traders will be taking some support from the International Monetary Fund (IMF) report saying that India with its favorable interest rate-growth differential has an advantage in addressing deficit concerns this year. Traders will also be reacting to the oil major Reliance Industries numbers, which were announced after the market hours. The company posted a 32% increase in its fourth quarter net to Rs 5,589 crore, the biggest rise in nearly three years. However, its sales dropped 1.4% to Rs 86,618 crore and debt rose to Rs 72,427 crore at the end of the quarter. Traders will also eyeing the gold and crude prices, as they propelled the mega rally of last session as declining commodity prices dispelled worries about the country’s current account deficit. The oil marketing companies are likely to remain in jubilant mood as the Finance Minister P Chidambaram has said that the government is considering freeing prices of locally produced oil and natural gas from state controls in a bid to lure more foreign investment.

Traders will also eye few important result announcements scheduled for the day. HCL Tech, Puravankara Projects, TCS and Yes Bank are the important ones to announce their numbers.

The US markets made a considerable rebound on Tuesday after the plunge in the previous session on the back of some upbeat earnings and economic data. While, the Commerce Department reported that housing starts jumped 7.0 percent to an annual rate of 1.036 million in March, then Coca-Cola and Johnson & Johnson came up with a better than expected numbers. Most of the Asian markets have made a positive start supported by the positive US new-home construction data and as the yen weakened after the IMF raised the growth forecast for Japan.

Back home, boisterous benchmarks showcased an enthusiastic performance on Tuesday by rallying over two percentage points and broke lots 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 to hunt for fundamentally strong but oversold stocks. Frontline indices managed to finish the session near its day’s high by settling above 5,650 (Nifty) and 18,700 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got bolstered on hopes for an interest rate cut in RBI’s policy review meet in May after Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence that the price situation would improve further in the coming months. Investors also took cues from the steep slump in gold and crude oil prices, which if continued, would help to ease concerns of high current account and fiscal deficit, a factor which has been cited by the central bank as a key variable in its monetary policy making. Meanwhile, encouraging statements of country achieving the fiscal deficit target of 3% in 2016-17, by Finance Minister P Chidambaram, for overturning fears of foreign investors about fiscal deficit, also provided the required fillip to the local equity markets. Strength in the domestic markets largely came from buying in rate sensitive as slowing wholesale price inflation raised rate cut expectations. Some strength also came in from buying in public sector oil marketing companies (OMCs) viz. IOC, BPCL and HPCL after US crude oil futures slipped to the lowest level in almost four months amid signs global economic growth may slow, curbing fuel demand while, buying in infra sector too boosted the sentiments after Finance Minister P Chidambaram said that the government will set up independent regulators for coal and road sectors in four months. Additionally, stocks related to power sector were trading jubilantly after the Central Electricity Regulatory Commission (CERC), the electricity regulator directed five state governments to compensate Tata Power for the losses it incurred from importing coal for its 4,000 mw Mundra ultra mega power project (UMPP). Finally, the BSE Sensex surged 387.13 points or 2.11% to settle at 18,744.93, while the CNX Nifty climbed by 120.55 points or 2.16% to end at 5,688.95.