Markets likely to get a flat-to-positive start

The Indian markets just managed to wrap the last session in green, recovering from their lows; however the trade remained choppy despite the government’s big move in FDI. Today the start is likely to remain cautious but in green, as the Bernanke’s impact is likely to be felt in the Indian markets too. FDI liberalization will continue to hog the limelight with leading industry bodies FICCI and CII welcoming the government's move to hike foreign direct investment (FDI) limits in insurance, retail, telecom, defence and a host of other sectors. Meanwhile, the power and fertilizers stocks will be in action, as the government has decided not to divert supply of domestic gas from urea manufacturers to the fuel-starved power sector, while the empowered group of ministers (EGoM) on gas allocation will meet again on Monday to find some solution for the power sector. Oil & gas sector too will be buzzing as the Union Petroleum and Natural Gas Minister Veerappa Moily has emphasized the need for greater investment in the oil and gas sector and has said that the government is committed to deal with the energy security issues.

Apart from this, there will be lots of important result announcements to keep the markets ticking. Axis Bank, Bajaj Finserv, DB Corp, IDBI Bank, Kotak Mahindra Bank, Mindtree, Rallis India, S KumarsCom and TCS will be among the many to report their numbers today.

The US markets ended modestly higher on a positive reaction to remarks by Federal Reserve Chairman Ben Bernanke who said that Fed’s asset purchases are by no means on a preset course, and also on some better than expected earnings announcements that offset the report that housing starts tumbled 9.9 percent in June. The Asian markets have made a mixed start, though most of them are in green, as Fed chief allayed fears of stimulus may be curbed, while few others led by Chinese market are in red as International Monetary Fund said that China’s economic growth may trail estimates.

Back home, markets could not return to their full fervor on Wednesday despite government’s latest effort to boost rupee and revive investment. Though, the day started on a positive note in reaction to the governments’ late evening decision to relax FDI norms for over a dozen sectors in its bid to bolster investment and growth, but the latter part of trade turned choppy with rupee once again losing its strength despite all measures. Though, the global cues were not favourable, as the US markets snapped last session on a negative note, paring some of their gains from last few day’s rally, while the Asian markets too made a mixed start ahead of Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee. Earlier, the Indian markets after RBI’s shocker in last session, got a boost after Prime Minister in a high level meeting relaxed FDI rules. The government raised the FDI cap in four sectors and changed the FDI route to automatic (compared with the earlier route of requiring approval from the Foreign Investment Promotion Board) for eight sectors. However, there was no change in FDI limit in civil aviation, while FDI cap in defence production too was kept unchanged at 26 percent. Also, the government did not hiked FDI cap in politically contentious multi-brand retail. Markets also got some boost with Finance Minister P. Chidambaram saying that India will achieve its overall budgeted revenue target in the fiscal year to March. Markets reversed their early gains in mid of the trade after finance minister P Chidambaram said that the Revenue Department will target 12 lakh service tax assessees who have stopped filing returns. However, markets returned to the green zone supported by good numbers from the private sector banking major HDFC Bank, which posted 30% increase year-on-year in its net profit at Rs 1843 crore for the first quarter of the current financial year. Though, its net nonperforming loans as a percentage of total assets increased to 0.3% compared with 0.2% a year ago and weighed on the stocks, taking it lower by over 2 percent. Meanwhile, spurt in FMCG major HUL which surged to its fresh lifetime high and ITC along with other FMCG majors, helped the markets to recover in late trade. Finally, the BSE Sensex gained 97.50 points or 0.49% to settle at 19,948.73, while the CNX Nifty rose by 18.05 points or 0.30% to end at 5,973.30.