Markets to get a cautious start after the big rally

The Indian markets showed a remarkable rally in last session with benchmarks surging close to four percent in a single session. It was blue chips led rally but the broader markets too participated on getting good trade data and strength in rupee. Today, the start is likely to be a bit cautious tailing the regional peers and markets may consolidate after the big rally.  Though, the India Inc. has lauded the better export data and has said that it expects the positive developments to help the rupee appreciate and growth to revive in the coming months. Prime Minister's Economic Advisor (PMEAC) C Rangarajan too has asserted that India's economy is likely to grow at around 5.5 percent this fiscal. The PMEAC Chairman said special emphasis was being given on production and capacity-creation in some key infrastructure sector that lies in the public domain. The banking stocks are also likely to get some encouragement with latest initiative of the Reserve Bank of India (RBI), it has said that banks can borrow from overseas market up to 100% of their unimpaired Tier I capital as at the close of the previous quarter, with an upper limit of $10 million. Meanwhile, there is good news for the foreign investors too, as the Securities and Exchange Board of India (SEBI) plans to come out with notifications to minimise the know your customer (KYC) requirement for FIIs that have established a strong track record of compliance with Indian rules.

The US markets continued their rally, extending their gains for yet another day amid cautious optimism that the Syrian crisis could be resolved without US military action. The Asian markets have made a mixed start, though some of the indices are in green on easing Syrian tension but others are trading lower, suffering some profit booking after their recent rallies.

Back home, boisterous benchmarks once again showcased an enthusiastic performance on Tuesday, by rallying close to four percentage points and breaking lots of psychological levels in their northbound journey. Sentiments remained up-beat since beginning as key bourses opened with a huge gap on upside and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength with investors continued hunt for fundamentally strong stocks. Frontline indices managed to extend their rally for fourth straight day and settled near their crucial 5,900 (Nifty) and 20,000 (Sensex) levels. Sentiments got bolstered after Indian rupee appreciated against the dollar as receding geopolitical risks from Syria and strong exports in August helped lift the currency. Supportive cues from US markets provided the much needed support to local markets initially, as sentiments got boosted by signs that the US will wait before launching a military strike against Syria. Moreover, all the Asian equity indices ended in the green after China’s August real activity data came in stronger than expected, which will help sustain the market rally due to improving market sentiment towards China’s economy. Back home, markets extended their rally in late trade after India’s trade deficit for the month of August narrowed to $10.9 billion, versus $12.26 billion in July down 11% month-on-month. The deficit narrowed on the back of improving exports and declining imports. The exports stood at $26.14 billion in the month of August as against $25.83 billion in July (up 1.2% month-on-month), while the imports came in at $37.05 billion versus $38.10 billion in July. Imports saw a decline of 2.7% month-on-month. Some support also came in after telecom stocks like, Bharti Airtel, Idea Cellular and Reliance Communication surged, as the Telecom Regulatory Authority of India (TRAI) proposed a hefty cut of up to 60 percent in minimum auction prices for mobile phone spectrum in a response to lukewarm interest. The regulator has recommended a 37 percent cut in the all-India reserve price of the 1800 megahertz frequency band that is used for basic mobile services. Finally, the BSE Sensex surged 727.04 points or 3.77% to settle at 19,997.10, while the CNX Nifty climbed by 216.35 points or 3.81% to end at 5,896.75.