Markets to remain in jubilant mood taking cues from regional counterparts

The Indian markets surged in last session ahead of a long weekend, RBI governor and the Finance minister came to the rescue of the markets after they affirmed that the CAD will be much lower than expected. Today, the start is likely to be extension of the last session’s rally and markets are likely to follow their regional counterparts. As the result session has virtually came to an end traders will be eyeing the Reserve Bank of India’s (RBI) monetary policy that will be announced next month. The RBI governor has said that several factors, besides inflation, will determine the stance of its policy review and a status quo on the repo rate is likely to provide some relief to banks. Meanwhile RBI has said that it will (rpt) purchase bonds worth Rs 8,000 crore next week under the open market operations (OMO) to inject liquidity in the system, this is likely to give some support to traders. There will be some buzz in the real estate sector, as according to a report by EY-FICCI, India's real estate sector would need an investment of $257 billion by 2015. Apart from this there will be lots of individual scrip specific movement.

The US markets ended higher on Friday making it a sixth week of gains on Janet Yellen’s support for the Federal Reserve’s stimulus programme. The Asian markets have made a jubilant start with some of the indices gaining by over a percent in early trade, taking cues from the Chinese pledge to carry out the broadest expansion of economic freedoms since at least the 1990s. Japanese market too was trading higher as the yen maintained its slide past 100 per dollar.

Back home, the last trading day of the week finally saw the tide turning in the favour of the bulls, when the Indian equity markets fervently rallied over a percent to break the seven days losing streak on Thursday. There were global as well domestic factors that took the markets higher for the day. While, the concern of FII outflow were eased with Janet Yellen defending the central bank’s unconventional asset purchase program, called it the best way to get the economy back to normal. On the other hand Reserve Bank of India (RBI) Governor Raghuram Rajan in his last day after market hour press meeting said that the 2 percent industrial growth in September is disappointing, but hoped that the economic situation would improve in the second half of the fiscal on the back of good monsoon and exports. He also said that any change in benchmark interest rate would depend upon the price situation and other macro-economic factors. The global markets remained in jubilant mood, while the US markets shrugging early weakness turned higher overnight, the Asian markets surged rejoicing the testimony of Janet Yellen, defending quantitative easing that signaled stimulus will be maintained until the US economy improves. Back home, the mood of the markets remained jubilant since start and traders went for value buying at lower levels induced by positive global cues and assertion of RBI governor Raghuram Rajan’s assertion that the current account deficit (CAD) in the current fiscal will come down to $56 billion, less than 3 per cent of GDP, and lower than the government estimate of $70 billion and $88 billion reported last year. Rajan added the RBI will choose the most appropriate solution to settling the dollar swaps with oil companies when the time comes and soothed the nerves of traders who were worried on rise in dollar against rupee. However, some profit booking emerged during the noon trade after the WPI inflation numbers were announced. India's main inflation gauge, based on monthly WPI, accelerated to highest level since February at 7% for the month of October as against 6.46% (Provisional) for the previous month of September and 7.32% during the corresponding month in the previous year. Markets came off their day’s high on the concern of another rate hike by RBI in view of the rising inflation. Though, the volume remained on higher side of about 1.60 lakh crore and the broader indices outperformed the benchmarks. Sectorally the day was of the rate sensitives and led by auto, bankex and realty surged by over two percent, however defensive healthcare and IT gauges suffered minor cuts on the BSE. Finally, the BSE Sensex surged by 205.02 points or 1.02%, to settle at 20399.42, while the CNX Nifty gained 66.55 points or 1.11% to settle at 6,056.15.