Markets to get a cautious start, likely to consolidate after a big rally

The jubilation at the Indian markets touched its peak in last session with benchmarks reaching their 28 months high. There was optimism of rate cut, while traders anticipated that the government will keep its reform measures going despite some political jitters. Today, the start is likely to be a bit cautious on mixed regional cues and there will be some consolidation after the big rally. Meanwhile, a survey by global research firm Ipsos has stated that India's economic confidence dropped last month due to plethora of corruption allegations against the Union government ministers and the country is now the sixth most economically confident country in the world. However, there is some good news too, as the Moody's has said that Indian economy is expected to pick up and grow in the range of 5.5-6.5 percent in 2013. Though, it noted that the Current Account Deficit (CAD) remains a persistent concern for India. There is some good news for the foreign investors too, as the newly appointed Law Minister Kapil Sibal cleared a Sebi regulation which permits put and call options in mergers and acquisitions. There will be some somberness in the oil and gas sector stocks, as the Oil Ministry's proposal for an across-the-board near doubling of natural gas prices has been rejected by the Cabinet Secretariat.

There will be some important result announcements too, to keep the markets buzzing. Arvind, Bajaj Auto, D B Corp, Kalpataru Power, Orbit Corp, Reliance Capital, TTK Prestige and UCAL Fuel are among the many to announce their numbers today.

The US markets continued to move higher on Wednesday, though there was some volatility on mixed batch of US economic data, Federal Reserve reported a bigger than expected drop in industrial production in April. At the same time housing market index climbed higher in May. The Asian markets have started mostly in red, though Japan’s GDP expanded faster than expected but traders took cues from the decline in banks on lower earnings forecast.

Back home, boisterous benchmarks showcased an enthusiastic performance on Wednesday by rallying close to two 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 for fundamentally strong but oversold stocks. Frontline indices managed to finish the session around highest levels in 28 months and settled comfortably above 6,100 (Nifty) and 20,200 (Sensex) levels as investors took to hefty across the board buying. Sentiments got buttressed after buying in rate sensitives’ got accelerated as the Reserve Bank of India’s Governor Duvvuri Subbarao said that the central bank will take note of falling inflation when discussing potential interest rate cuts.  Sentiments got bolstered after Finance Minister P Chidambaram said that he would set up a cell in his office to monitor and resolve the issues for speedy completion of the stalled infrastructure projects. Some support also came in after the global rating agency Standard & Poor’s said that India is projected to grow by 6 percent in the current fiscal, while growth is expected to be steady in most of the Asia Pacific economies. Globally, European counters recovered in early deals on short-covering. Back home, some support also came in from buying in realty stocks. Scrips like, DLF, Indiabulls Real Estate, Unitech, DB Realty, HDIL, Parsvnath Developers and Anant Raj Industries traded jubilantly during the session as the latest data showing a sharp fall in wholesale price inflation in April 2013 raised hopes that the RBI may further cut policy rates to perk up economic growth. Lower interest rates may help revive demand for properties. Additionally, public sector oil marketing companies viz. BPCL, HPCL and IOC all edged higher after the central bank allowed them to raise a part of their short-term capital requirements through overseas borrowings. Aviation and infra sector stocks too traded jubilantly after the Reserve Bank of India eased norms for external commercial borrowings (ECBs) for the aviation and housing sectors, in a move to improve flow of cheaper funds into key infrastructure sectors. Finally, the BSE Sensex surged 490.67 points or 2.49% to settle at 20,212.96, while the CNX Nifty climbed by 151.35 points or 2.52% to end at 6,146.75.