Markets to get a positive start tailing gains in global markets

The Indian markets witnessed a good bounce back in last session, supported by positive global cues and as rupee depreciation halted after regulators took measures to arrest its fall. Today, the start is likely to remain jubilant, though markets may not get a gap-up opening. Marketmen will be getting some support with the statement of Prime Minister Manmohan Singh in a high-level committee meeting that sustained growth in manufacturing was critical if the country had to grow at 8-9 per cent. In the meeting it was decided that more domestic manufacturing capabilities would be created. Traders will be eyeing the movement of rupee, whether the depreciations gets checked with the regulators measures or not. There will be some cautiousness too, as the International Monetary Fund (IMF) has cut India’s growth outlook for 2013-14 to 5.6 percent from the 5.8 percent it projected in April. The textile sector stock will be in action as the government will come out with an action plan to increase competitive strength of the textiles sector and boost exports within four weeks. The beleaguered garment exporters are finding the currency depreciation as a blessing in disguise for the sector. The steel stocks too will be watched, as government has set a target of trebling steel production capacity to 300 million tonne by 2025.

The US markets continued their rally on Tuesday and all the major indices gained over half a percent encouraged by an upbeat start of the earnings season with Alcoa reporting a better than expected second quarter numbers. The Asian markets too have made a good start with all the major indices trading in green, though they pared some gains, as Chinese exports unexpectedly declined in June and as the Bank of Japan begins a two-day policy meeting.

Back home, buoyed by firm global cues, Indian equity benchmarks resumed their northward journey after a day’s break on Tuesday with frontline gauges recapturing their crucial 5,850 (Nifty) and 19,400 (Sensex) bastions. The indices traded range-bound but firmly throughout the session and ended the trade with a gain of over half a percent. The sentiments in the domestic markets remained jubilant after the Reserve Bank of India (RBI) stepped in to prevent further fall in the rupee. The rupee appreciated on Tuesday from a record low in the previous session after regulators restricted speculative trading in currency derivatives, although the measures are expected to provide only brief respite for the currency. Sentiments remained up-beat since beginning as supportive cues from US markets provided the much needed support to local markets, where sentiments remained upbeat ahead of the start of earnings season and on getting report that consumer credit increased in May by $19.6 billion to $2.8 trillion, the most in a year. Firm opening in European counterparts, too boosted the sentiments with CAC, DAX and FTSC edging higher after the European Union and the International Monetary Fund agreed to give Greece a 6.8 billion euro lifeline to save it from bankruptcy. Back home, some support came in from rally in NBFC stocks, as RBI eased rules for NBFC-asset finance companies to raise external commercial borrowings by allowing the lenders to raise such funds through the automatic route. Some buying was also witnessed in shares of aluminium makers like Hindalco Industries and National Aluminium Company (Nalco) after Alcoa Inc, the largest US aluminum producer, reported better than expected Q2 results. Meanwhile, sugar stocks rallied after government issued a notification to implement a hike in import duty on sugar to 15 per cent from 10 per cent, as the world’s top sugar consumer tries to prop up local prices which are falling due to ample and cheap global supplies. The education sector stocks too rallied. Everonn Education, MT Educare, Aptech, NIIT and Edserv Softsystems gained in the range of 6-15%. Educomp Solutions was locked at 10% upper circuit on approaching corporate debt restructuring forum to restructure its rupee debt. Finally, the BSE Sensex gained 114.71 points or 0.59% to settle at 19,439.48, while the CNX Nifty rose by 47.45 points or 0.82% to end at 5,859.00.