Markets to get a cautious start after the big rally

The Indian markets went for a humungous rally in last session taking cues from the global and local developments. Today, the start is likely to be flat-to-cautious and some consolidation can be expected after the big rally. Traders will be a bit more cautious with the Securities and Exchange Board of India (Sebi) tightening disclosure norms for listed corporates so that investors can get more insight into events that affect company’s operations and stock price movements. Pharma sector may remain in cheerful mood on report that foreign direct investment in the pharma sector more than doubled to $1.07 billion during April-August. Aviation sector too is likely to rejoice the news that the domestic airlines flew 50.08 lakh passengers in October this year, up by almost 10 percent increase over the 45.55 lakh passengers carried by them in the same period last year.  

The US markets consolidated on Monday and ended mostly lower on profit booking after the recent rallies. Though, the economic news remained positive with National Association of Home Builders reporting that homebuilder confidence held steady in the month of November. The Asian markets have made a mixed start with some of the indices trading modestly in red; Japanese market was down as the yen strengthened against the dollar, while other few are trading in green amid optimism China’s economic reforms will boost growth.

Back home, Indian markets went for a stupendous rally on Monday, extending the gains what they gathered ahead of the long weekend. On Friday the regional markets surged taking cues from US Federal Reserve chair nominee Janet Yellen’s indication that she will continue to support the economy with stimulus measures, but the Indian markets missed the gains due to a public holiday and today was expected to be a catch-up. However, the markets got another boost with Chinese Communist Party signaling a bigger focus on fiscal concerns that gave a fillip to the regional markets and a gap-up one to the Indian markets. The local bourses got a shot in arm with the strength in rupee which moved higher after the Reserve Bank of India announced purchasing bonds worth Rs 8,000 crore this week under the open market operations (OMO) to inject liquidity in the system. The global markets showed an enthusiastic performance after China unveiled its most sweeping reform agenda in more than 30 years. While, the Japanese markets after a good start ended flat with a negative bias. However, the European markets made a soft start but were unable to hinder the unabated run of the local markets. Back home, it was a three digit rally for both the indices with remarkable thing being that at no point of time there was any selling or choppiness, instead the gains enlarged with the progress of the trade, signifying the bullish sentiments of the traders. While, gains were spread across the board, the banking sector was the most jubilant with the RBI’s announcement of OMOs and RBI governor saying that he was heartened by the outcome of core CPI inflation. Bank Nifty gained the most in a day in percentage term since October 29. Meanwhile, Economic Affairs Secretary Arvind Mayaram said that the government is taking measures to give momentum to the growth process which was affected by the global financial crisis in 2008. However, he also noted that sectors like electricity, agriculture, education, healthcare and railways still suffer from serious visible competitive distortions. Traders’ mood remained firm despite United Bank of Scotland (UBS) downgrading India’s credit rating to ‘neutral’ from ‘overweight’. On the other hand, the financial services company upgraded China’s credit worthiness to ‘overweight’ from ‘neutral’. The IT pack after initial jitters  on rupee strength, moved higher taking cues from the report that China for the first time will allow foreign It companies in BPO sector. Broader markets too performed well with gain of about a percent. Finally, the BSE Sensex surged by 451.32 points or 2.21%, to settle at 20850.74, while the CNX Nifty gained 132.85 points or 2.19% to settle at 6,189.00.