Markets likely to see some consolidation after three straight days of gain

The Indian markets extended their jubilation in the last trading session, making it a hat-trick of positive ending. Rupee after initial volatility strengthened on government and RBI measures and helped the equity markets to move higher. Today, the start is likely to be flat-to-positive as the regional markets are trading flat, though traders will be watching the reaction on the gold and jewellary stocks after the Government raised import duty on precious metals gold and silver to 10 percent. This is the third time since January that import duty on gold has been hiked. However, there will be some sign of relief on the PSU oil marketing companies after international crude started showing some decline after surging in last three sessions. There will be some result specific reactions, especially in the steel sector stocks after Tata Steel beating the street, posted a 90% year-on-year rise in net profit for the first quarter at Rs 1,142.33 crore.

In other important result announcements, ABG Shipyard, Amara Raja, DEN Network, Future Retail, GEI Indl, Gitanjali Gems, Hanung Toys, HDIL, Jain Irrigation, LIC Housing Fin, Mcnally Bharat, MMTC, Natco Pharma are among the many to announce their quarterly numbers.

The US markets ended modestly higher after rebounding from their early lows. There was positive news from the economy front, retail sales rose by better than expected 0.5 percent in July compared to a 0.1 percent increase in June. Traders also got some support from Atlanta Fed President Dennis Lockhart comments regarding Fed stimulus. The Asian markets have mostly made a positive start led by the Chinese market, Japanese shares too have extended their advance as yen weakened and on back of good economic data across the globe, bolstering the global outlook.

Back home, boisterous benchmarks once again showcased an enthusiastic performance on Tuesday, by rallying close to one and a half percentage points and breaking lots of psychological levels in their northbound journey. Barring initial volatility, there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Frontline indices managed to extend their rally for third straight day and settled near their crucial 5,700 (Nifty) and 19,250 (Sensex) levels as investors took to hefty across the board buying. Sentiments got bolstered from the Reserve Bank of India’s (RBI) chief Duvvuri Subbarao’s statement that perhaps there was a need to reduce the reserves that banks have to set aside via the cash reserve or the statutory liquidity ratios. Finance Minister P. Chidambaram’s statement that the government would bring down CAD to 3.7 percent of the gross domestic product (GDP) in the current financial year, too aided the sentiments. Further, the government’s move like amendment in the special economic zones (SEZ) norms to increase investments in these zones also boosted the investors’ sentiments as rising investment in SEZs will also increase the exports from SEZs. Firm opening in European counterparts too supported the domestic markets. Back home, recovery in Indian rupee too aided the sentiments. The Indian rupee was trading near 61 per dollar at the time of equity markets closing as against Monday’s close of 61.27 per dollar. Buying in Pharma related stocks too supported the sentiments as stocks like, Biocon, Aurobindo Pharma, Cipla and Sun Pharma edged higher after the Finance Minister said that the government will soon finalize the foreign investment policy on brown-field pharmaceutical projects. Finally, the BSE Sensex gained 282.86 points or 1.49% to settle at 19229.84, while the CNX Nifty rose by 86.90 points or 1.55% to end at 5,699.30.