Markets to get a positive start, extending their last session’s recovery mood

The Indian markets showed sign of recovery in the latter part of the trade in last session, though they could not manage a positive close. Finance Ministers’ words about the revival in the economy and assurance not to breach this year's fiscal deficit target boosted the sentiments. Today, the start is likely to be in green and the markets may strengthen with Prime Minister Manmohan Singh saying that our strategy must not only aim at faster growth but must also ensure that the growth processes are more inclusive. He has further stated that there is no reason to be disheartened over the decline in growth rate. Though, there will be some cautiousness related to the dismal growth figures of Core Sector growth, as eight key infrastructure sector grew at dismal 0.1% in June compared with an expansion of 7.9% in the same month last year. The PSU oil marketing companies will be in action, as the state-run fuel retailers have announced to raise the price of petrol by 70 paise and diesel by 50 paise a litre, both excluding local taxes, coming into effect from Wednesday midnight. There will be buzz in the shipping sector stocks too, as shipping ministry announced liberalized tariff regime for new projects at major ports and also promised to free them for existing terminals.

There will be lots of important result announcements; Adani Ports, Adani Power, BOB, Castrol India, Ceat, Cummins India, Glenmark Pharma, Glaxosmithkl Consumers, Idea Cellular, J&K Bank, Power Grid Corp, Reliance Comm,  Tata Teleservices, Union Bank etc are among the many to come with their earnings today.

The US markets once again closed mixed after a volatile trade following the release of the Federal Reserve’s monetary policy announcement, where the Fed announced that it is leaving interest rates as well as the size of its asset purchase program unchanged. The Asian markets have made a positive start, supported by the Fed indication of keeping its bond buying program at current levels and mainly due to the unexpected rise in the Chinese PMI, which rose to 50.3 in July compared to 50.1 in June.

Back home, key domestic benchmarks once again ended the volatile day of trade in the red terrain extending their losing streak for the sixth consecutive session on Wednesday. Though, recovery in last leg of trade helped the bourses to pare most of their losses. The benchmark got off to a negative start on the back of feeble global cues and extended their downfall to touch intraday lows. The indices even went on to test important psychological 19,100 (Sensex) and 5,650 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon after Finance Minister P. Chidambaram exuded confidence that economy would record a growth rate of 5.5 to 6 per cent in the current fiscal, up from 5 per cent a year ago. The indices tried hard to move back into the positive territory and even got there but only for a brief period as investors took the opportunity to cash in on the bounce back. Firm opening in European counters too supported the recovery in domestic markets. However, mostly lower closure in Asian markets dampened the sentiments. Back home, weakness in rupee too dampened the sentiments as it continued depreciating on doubts that whether the central bank can defend the currency with its existing cash-draining measures unless policy makers take additional steps. Sentiments also got dampened on report that overseas investors have pulled out around Rs 18,400 crore across both the equities and debt markets. The outflow of foreign money from the debt market was higher compared to the equities markets during the month. FIIs moved out close to Rs 12,000 crore in debt, while equities saw outflows of about Rs 6,000 crore in July. However, some revival seen in the late hour of trade where the frontline counters pared most of their intraday losses after Finance Minister said government will further liberalise the FDI policy and encourage public sector undertakings to raise funds from overseas markets. He further added that, in a bid to deal with the Current Account Deficit (CAD), the government will relax the External Commercial Borrowing (ECB) norms, attracting investments from sovereign wealth and pension funds and NRI deposits. Moreover, Chief Economic Adviser Raghuram Rajan’s statement too aided the sentiments where he said that government will announce measures to help narrow the current account deficit in the next few weeks, including looking at ways of bringing in foreign investments. Finally, the BSE Sensex lost 2.64 points or 0.01% to settle at 19345.70, while the CNX Nifty declined by 13.05 points or 0.23% to end at 5,742.00.