Markets to get a cautious start; infra and aviation stocks to be watched

The Indian markets showed a massive rally in last session on the back of government’s decision to raise gas prices by almost double. Today, the start of the new week is likely to be cautious as the global cues are not that strong and major indices may get a flat start. Traders are likely to get some encouragement with the Prime Minister Manmohan Singh setting an investment target of Rs 1.15 lakh crore in PPP (public private partnership) projects across infrastructure sectors in rail, port and power in the next six months. Meanwhile, the Confederation of Indian Industry has (CII) made a strong push for speedy action to implement the proposed Goods and Service Tax (GST) and has said that the industry hopes that political developments would not overshadow its progress. There will be buzz in the oil marketing companies and the aviation stocks after the announcement in prices of petroleum products. Later ATF prices too were hiked by a steep 5.8 percent, the second consecutive increase since June. Almost all airlines have already been warning that the dollar’s surge against rupee has added to their costs and will now be forced to hike fare prices. There will be some buzz in the banking license aspirants as the deadline for putting in applications will close today evening.

The US markets snapped their gaining streak in last session and ended lower, though there was sign that Fed may not scrap its bond buying program so early, however trade was impacted by a decline in the consumer sentiment in June. Most of the Asian markets have made a soft start weighed down by the report that China's manufacturing expanded at the slowest pace in four months in June, though the Japanese market has made a positive start as yen weakened but it too has lost its momentum.

Back home, extending their last session’s rally, stock markets in India displayed an awe-inspiring performance and bulls looked waiting for significant upside triggers to open fresh positions on first day of the new Futures and Options series. The frontline equity indices rallied vehemently by over two and half a percentage points and not only extended their gaining streak for the second successive session but also soared to highest levels in more than one and a half week. After the gap-up opening, the frontline gauges managed to capitalize on the momentum and there appeared not even an iota of profit booking in the session and the benchmarks managed to fervently gain strength to strength, to end tad below their important psychological 19,400 (Sensex) and 5,850 (Nifty) bastions. Sentiments remained sanguine since start of the trade as supportive cues from US markets provided the much needed support to local markets initially. Rally in Asian counterparts too boosted investors’ confidence with Japanese Nikkei rallying over three and a half percent after the nation’s core consumer prices came flat in May compared with a year earlier, marking the first time they have stopped falling in seven months. Back home, market participants remained in cheerful mood after Government, late last evening, approved a complex formula that would double the price of gas to $8.4 per unit from all domestic fields operated by government and private oil firms, a move which will result in rise in power tariff, urea cost and CNG prices. This will be the first revision in gas prices in 3 years. Sentiments also remained up-beat after power generation and fertiliser stocks gained on Finance Minister P Chidambaram’s assurance that the government would consider helping the power and fertiliser industries to cope with the doubling of domestic gas prices from April 1, 2014.  Sentiments also got support after Indian rupee appreciated and came substantially below the Rs 60 level against the dollar on the back of lower current account deficit (CAD). Rate sensitive sectors like Auto, Banking and Realty too edged higher on short covering and bargain hunting after the recent correction. Additionally, shares of tea stocks like, McLeod Russel, Assam Company, Jayshree Tea and Warren Tea edged higher on reports that tea prices in India surged at this week’s auction as higher temperature and lower rainfall in Assam raised concerns over production amid robust demand from local buyers for good quality leaf. Finally, the BSE Sensex jumped 519.86 points or 2.75% to settle at 19,395.81, while the CNX Nifty climbed by 159.85 points or 2.81% to end at 5,842.20.