Markets likely to get a soft start on sluggish global cues; rupee movement eyed

The Indian markets surged in last session and Sensex rushed to its two and-half-years high, tailing the rally in other global markets. Today, the start is likely to be a bit soft amid listless global equity markets. Rupee movement will be eyed, as RBI in its further move to support the rupee, lowered the amount banks can borrow or lend under its daily liquidity window. Being the penultimate day of July series F&O expiry, volatility too is expected in the late hours. There will be some somberness in the retail related stocks on the buzz that government may not change the FDI policy to suit any particular company. Meanwhile, a parliamentary panel has asked the government to set up a 'Retail Regulatory Authority' to deal with issues concerning foreign multi-brand retail companies in the country. However, the oil and gas companies will see some action as the Petroleum and Natural Gas Minister Veerappa Moily has said that there was no proposal before the government to reconsider the new gas pricing policy. Manufacturing sector too may get a boost, as the Commerce Ministry has asked the Finance Ministry to include provision for exempting units in the National Manufacturing and Investment Zones (NMIZs) from capital gains tax in the Direct Taxes Code (DTC) Bill.

There will be some important result announcements too, to keep markets buzzing. Ambuja Cements, Cairn India, Central Bank, Dabur India, Hero MotoCorp, Indiabulls Sec, Mahindra Lifespace, Novartis India, SKF India, United Phosphorus and Yes Bank will be among many to announce their numbers today.

The US markets made a mixed closing on Tuesday after a lackluster trade, though there were some good earnings announcements but a disappointing reading on regional manufacturing activity from the Richmond Federal Reserve offset the early gains. The Asian markets have made a mixed start with some of the indices trading marginally in red, led by Japanese market which is down despite its exports rising for the fourth month.

Back home, snapping two days of consolidation, Indian equity indices rallied by about two third of a percent to hit its highest close in two and a half years with frontline gauges surpassing their crucial 6,050 (Nifty) and 20,300 (Sensex) bastions. Sentiments remained up-beat since beginning as key bourses opened with a huge gap as consumer goods shares rallied to record highs with investors shifting to defensive stocks in an uncertain economic environment. Sentiments remained jubilant, after Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan said that the Indian economy will grow by 6 percent this fiscal on account of a good monsoon. The Reserve Bank of India’s (RBI) move to tighten gold imports again on Monday with an eye to cut a record current account deficit (CAD) too supported the sentiments. Supportive cues from US markets provided the much needed support to local markets initially and sentiments remained up-beat after the weak housing sales numbers in US eased the concerns of Fed tapering its stimulus soon. Rally in Asian markets too boosted the traders’ moral with Japanese Nikkei surging about a percent. Back home, stocks related to metal and mining counters like, NMDC, Sterlite Industries, Hindustan Zinc, JSW Steel, Tata Steel, Sesa Goa etc. remained on the buyers’ radar on expectations that Beijing will fine-tune its policies to support China’s economic growth. Sentiments also got support by buying in FMCG counters as stocks like HUL and ITC hit new highs. Meanwhile, investors continued to pile-up positions in software and technology counters after the rupee gave up all gains to trade flat for the day at 59.72 as there are no fresh dollar inflows into the market. Additionally, shares of jewellery makers like Titan Industries, TBZ, PC Jeweller and Shree Ganesh Jewellery edged higher on hopes that the move by the RBI to withdraw restriction on import of gold on consignment basis and against letters of credit is a positive for these companies. Rebound in gold prices too supported the sudden rally in shares of gems and jewellery companies. Finally, the BSE Sensex gained 143.01 points or 0.71% to settle at 20,302.13, while the CNX Nifty rose by 46.00 points or 0.76% to end at 6,077.80.