Markets to get a gap-up start tailing global rally; Infosys numbers eyed

The Indian markets after much of choppiness managed a positive close in last session, though traders remained cautious till last. Today, the start is likely to be good tailing the global markets but all eyes will be on the Infosys and IIP numbers slated to be announced later in the day. IT bellwether Infosys will mark the official start of second quarter earnings season. There are wide expectations that Infosys will perform better on the back of rupee depreciation and can report 3% growth in revenues in dollars. There is also expectation that Infosys will increase its sales growth forecast for fiscal 2014 from earlier 6% -10% to 8%-11% range. Traders will also be eyeing the Industrial growth numbers; the Index of Industrial Production (IIP) data for August though will be announced after the market hours but is likely to remain on growth path after surprising in last month with a growth of 2.6 percent and coming out of contraction mood. Meanwhile, the Reserve Bank of India governor Raghuram Rajan has said that Indian companies with high foreign currency debt could face difficulties but do not pose system-wide risks to the country's financial sector. However, there will be some concern too, as indicating tough times ahead, a survey by industry body Ficci has lowered the country’s economic growth forecast for 2013-14 fiscal to 5 percent from 6 percent projected in July. There will be some buzz in the fertilizers stock, as the Fertiliser Ministry has sought additional Rs 35,000 crore funds towards subsidy payment to companies.

The US markets went for a rally breaking their jinx of ending in red, on optimism about an end to the budget deadlock in Washington and traders largely shrugged off a report from the Labor Department showing a sharp jump in initial jobless claims. The Asian markets have made an all green start taking cues from the US markets and some of the indices are up by over a percent in early deals after US lawmakers indicated of continuing the talks on raising the nation’s debt limit to avoid a default.

Back home, key domestic benchmarks witnessed consolidation on Thursday as investors opted to remain on the side-lines ahead of the crucial Infosys’ second quarter earnings and IIP data tomorrow. Frontline gauges traded cautiously in a specific range throughout the session but buying which emerged in dying hours helped the bourses to keep their head above water at the end. Earlier, traders remained concerned as the International Monetary Fund, after a day of lowering its growth forecast for India, said that the country’s fiscal deficit is expected to increase to 8.5 percent of the GDP this financial year, mainly due to the downward revision in GDP growth, depreciation of rupee and higher global oil prices. Sentiments also got dampened after Indian rupee weakened in early trades on account of importers rushing to cover up their near term requirements ahead of the US debt payment deadline. But, markets got some respite from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that India’s GDP will see a turnaround in the coming quarters on account of various steps taken by the government to spur growth as well as good agricultural production. Some strength to the domestic bourses came in late trade as firm opening of European stocks and US index futures hinted to a positive start in US indices. Meanwhile, most of the Asian equity benchmarks ended the session in the green. Back home, sentiments also got some boost from buying in Auto sector stocks led by Tata Motors, which surged 5% on expectation that the company’s UK arm Jaguar Land Rover (JLR) will report strong volume growth over next few months led by start of dispatches of new RR Sport. Moreover, real estate stocks have been gaining ground ever since the RBI announced measures to ease short-term liquidity. Shares of some Non-banking finance companies (NBFCs) too edged higher after Reserve Bank of India (RBI) Deputy Governor K C Chakrabarty said that NBFCs have advantage over other applicants for banking licences as they already have good customer base. Additionally, shares of education companies such as Career Point, NIIT, Aptech, Educomp Solutions and MT Educare remained on buyers’ radar and ended higher by up to 20% on back of heavy volumes. Finally, the BSE Sensex gained 23.65 points or 0.12%, to settle at 20272.91, while the CNX Nifty added 13.50 points or 0.22% to settle at 6,020.95.