Markets to see some consolidation after the big rally

The Indian markets witnessed a surprise rally in last session, mainly on the back of short covering and the benchmarks after slight deviation of early trade, kept moving higher throughout the day with Sensex and Nifty re-conquering their crucial levels. Today, the start is likely to remain cautious and some consolidation can be expected after the rally. There will be some concern, as ahead of the government announcement of the FY13 GDP numbers on May 30, Economists have forecast sub-five per cent readings in the March quarter GDP that takes the overall economic expansion in FY13 to a decade low of around five per cent. However, there will be some support for the market with the Finance minister P Chidambaram statement that India’s growth story is here to stay. He has said that the country has a huge potential and we would continue to grow at 5% to 6% in the coming decades. On the same time there will be some reaction in oil & gas sector along with the fertilizers and power sector, as the meeting of the Empowered Group of Ministers (EGoM) on changing priority for gas allocation scheduled today, has been postponed.

Also, there will be lots of important result announcements to keep the markets buzzing. Aban Offshore, Bombay Dyeing, CESC, Colgate Palmolive, Engineers India, Gail India, Gitanjali Gems, Godrej Inds, Hindalco Inds, HPCL, Jain Irrigation, Parsvnath Developers, Power Grid Corporation, PVR and REC are among the many to announce their numbers today.

The US markets remained closed on Monday for Memorial Day holiday and were unable to give any cues to the other global markets. The Asian markets after a cautious start have started gaining some pace, though the Chinese market was still in red after the Chinese Premier Li Keqiang said his country is confronted by "huge challenges" as it opens up the economy and reforms will be accompanied by tapered-off levels of growth.

Back home, energetic benchmarks exhibited an enthusiastic performance by rallying over one and a half percentage points and breaking a lot of psychological levels in their bull run on first day of F&O expiry week. There appeared not even a bit 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 intraday high and settled above 6,050 (Nifty) and 20,000 (Sensex) bastions as investors took to hefty across the board buying. Sentiments got some support from Prime Minister Manmohan Singh’s statement that government is trying to remove investment bottlenecks, which is holding up the growth. He further added that India’s economic growth would accelerate to 6-6.5 percent in the current financial year as compared to around five percent growth registered in the previous year. Sentiments got buttressed after index heavyweight Reliance Industries (RIL) surged over five per cent to post its biggest percentage gain since September 2012, after the oil & gas major and its partners BP and NIKO announced a significant gas and condensate discovery in the KG D6 block off the eastern coast of India. Rally got extended at D-street in late hours supported by firm opening in European markets. Back home, markets continued to trade jubilantly supported by buying in PSU counter as the government is working out norms for utilization of surplus funds of cash-rich PSUs with a view to boost investment and promote growth. Stocks related to fast moving consumer goods sector too remained on the buyers’ radar on report that the monsoon is expected to hit Kerala’s coast on June 03, 2013. Monsoon had brought its first showers to the Andaman Sea on May 17, three days before the normal onset date. Additionally, telecom stocks remained in demand on reports that Reliance Communications (RCom) raised basic rates for both GSM and CDMA prepaid mobile-to-mobile calls by 33 per cent to 2 paise per second from 1.5 paise per second. Finally, the BSE Sensex gained 326.44 points or 1.66% to settle at 20,030.77, while the CNX Nifty rose by 99.60 points or 1.66% to end at 6,083.15.