Markets to get a good start on firm global cues

The Indian equity markets despite a choppy session managed to close with modest gains on Friday on strength in power, Capital goods and realty stocks. There was some somberness due to S&P retaining the sovereign ratings BBB- with negative outlook. Industry body CII has termed the S&P decision unfortunate and harsh. Today, the start is likely to be in green on the back of firm global cues, Nifty that missed the 6200 mark on Friday, is likely to gain it in very initial trade. There will be buzz in the banking sector, as the apex bank, Reserve Bank of India (RBI) has proposed a review of all banking licences from the ‘fit and proper’ angle, following the allegations made by Cobrapost, which involves assessment of the promoters, management, CEOs of even the existing banks. There will be some action in the stocks related with retail business, as the government will issue fresh clarifications this week on foreign direct investment in multi-brand retail. There will be some buzz from the primary market too, as one of the largest initial public offers by an Indian internet company, Just Dial’s estimated Rs 950 crore IPO will open today.

There will be lots of important result announcements too. Adani Enterprises, Apollo Hospital Enterprises, Bayer Cropscience Ltd, Coal India, City Union Bank, Divi's Laboratories, IFCI, India Cements, PC Jeweller and Volatas along with many others will be announcing their numbers today.

The US markets moved higher on Friday in a reversal from the previous session on the back of some good economic data. Consumer sentiment in the month of May improved substantially, while the leading economic indicators rose better than expected. The Asian markets have made a good start with some of the indices trading higher by over a percent, as sentiments in the region have got a boost with the sign of improving global economic recovery.

Back home, key domestic benchmarks managed to keep their head above water on last trading day of the week, prolonging their gaining streak for the fourth straight day, after a very stirring tussle between bulls and bears throughout the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them stay above their crucial 6,050 (Nifty) and 20,000 (Sensex) levels. Risk appetite improved after Standard & Poor’s (S&P) maintained their rating on India without downgrading it, which was feared by market participants due to country's burgeoning current account deficit. S&P has affirmed BBB- rating on India and have retained their negative outlook. Further, the global rating agency said there is 1 in 3 chance of downgrading India rating in the next 12 months. Global cues remained mixed after subdued Wall Street closing in red, Asian markets ended mostly in green. Back home, hopes for an interest rate cut by the Reserve Bank of India in its June 17 monetary policy further supported buying. Meanwhile, the Prime Minister’s Office (PMO) asking the Planning Commission to formulate a draft Bill on Dispute Resolution in Public Contracts in consultation with all stakeholders and Ministries supported the positive sentiment. Some support also came in from buying in software stocks which rose on a weak rupee. The rupee lost 0.07 paise to 54.84 against the dollar on the Interbank Foreign Exchange due to appreciation of the US currency against euro overseas. Meanwhile, traders continued to pile up positions in Realty stocks for third consecutive day 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. Stocks of cement companies too remained on the buyers’ radar after the Competition Appellate Tribunal (COMPAT) passed an order granting a stay on the penalty imposed by the Competition Commission of India on 11 cement firms on allegations of cartelization. However, gains remain capped after stocks of local drug manufacturer hit rock bottom after the government issued the long-pending drug price control order, paving the way for the implementation of national pharmaceutical pricing policy, which will lead to a reduction of an average 20-25% in medicine prices. Finally, the BSE Sensex gained 38.79 points or 0.19% to settle at 20,286.12, while the CNX Nifty rose by 17.40 points or 0.28% to end at 6,187.30.