Indian markets to see some correction after the big rally

The Indian markets went for a rally in last session after three straight sessions of fall, mainly on the back of sharp fall in international crude prices after Iran reached a deal with Western powers. Today, the start is likely to be soft-to-cautious tailing the sluggish global cues and market may lose some of their gains garnered in last session. Apart from equity there will be some buzz in the bond and money markets too, as the Reserve Bank of India has said that it will launch CPI-indexed bonds aimed at protecting the savings of retail investors from the impact of price rise by the end of next month. While, the PSU oil marketing companies will continue to remain in jubilant mood, there will be some reaction in pharma and real estate stocks too, as the Cabinet deferred the consideration of proposals to relax foreign direct investment norms in the housing sector and to reduce the FDI cap to 49 percent in critical areas of the pharma segment. There will be some buzz in the shares of Uttar Pradesh based sugar mills, as the government and representatives of the sugar mills are slated to meet for another round of talks. The gold and jewellary stocks too may remain in somber mood as the Exports of gold jewellery from India fell 6.9 percent on month in October to $608.95 million.

The US markets made a flat closing after a lackluster trade and traders digested the news of historic agreement regarding Iran's controversial nuclear program as the trade progressed and remained concerned about unexpected drop in pending home sales. The Asian markets have made a mixed start with some of the indices trading marginally in red led by the Japanese market, as the yen strengthened against dollar.

Back home, boisterous benchmarks, snapping three days of continuous fall, showcased an enthusiastic performance on Monday, by rallying close to two 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 the up-side 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 continuing hunt for fundamentally strong stocks. Frontline indices managed to end near intraday high and settle above their crucial 6,100 (Nifty) and 20,600 (Sensex) levels. Sentiments got bolstered on hopes that easing of global crude oil prices following a landmark deal between Iran and world powers would help India reduce its current account deficit and contain inflationary pressures. Some support also came in from E&Y’s report that India has emerged as the most attractive investment destination surpassing neighbouring China and the US, due to relaxation in FDI norms to boost investor sentiments. Rally in pharma and realty sector too boosted the investors’ moral, as the Cabinet is likely to take a decision on relaxing FDI norms for the housing sector and reducing foreign direct investment cap to 49 percent in critical areas of the pharma segment. Global cues too remained euphoric, most of the Asian equity markets ended higher with investors rejoicing the news that Iran reached an agreement with the Western powers after five days of talks in Geneva and agreed to limit its nuclear program. European markets too opened in the green with news that western powers and Iran struck a historic nuclear deal on November 24. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 62.45 per dollar at the time of equity market closing, against the Friday’s close of 62.83 on the Interbank Foreign Exchange on the back of dollar sale by exporters and banks. Some support also came in from rally in cement stocks like Ambuja Cements and ACC. Both, gained after Ambuja Cements received shareholders’ approval at an extraordinary general meeting (EGM) held on November 23, 2013, to buy a 24% stake in Holcim (India) from Holderind International for Rs 3500 crore, and for the subsequent amalgamation of Holcim (India) with it. Finally, the BSE Sensex surged by 387.69 points or 1.92%, to settle at 20605.08, while the CNX Nifty gained 119.90 points or 2.00% to settle at 6,115.35.