Markets to continue their gaining momentum with a good start

The Indian markets bounced back and major indices surged by over a percent in last session as the threat of war in Ukraine receded. Today, the start is likely to be continuation of the gains on good global cues. Today, all eyes will be on Election Commission who will be announcing the schedule for the 2014 Lok Sabha elections. With the announcement of poll dates, the Model Code of Conduct for governments and political parties will come into force with immediate effect. There will be some action in the infra stocks, as the government has cleared a long pending bailout policy for financially-stressed highway developers which would allow them to defer the premium that they have committed to pay the government. Revenue shortfall loan mechanism would be used to offer relief. There will be some buzz in the banking stocks too, as the Finance Minister P Chidambaram will meet chief executives of public sector banks for a quarterly performance review. In the meeting, besides capital adequacy, Chidambaram is expected to discuss the NPA situation and recovery measures taken by banks, status of stalled projects as well as credit flow to new projects.

The US markets went for a rally in last session on easing concerns about the situation in Ukraine after the Russian President Vladimir Putin said there was “no need” for Russia to use military force in Ukraine. The Asian markets have made a jubilant start tailing the surge in US markets and most of the indices are showing good gains in early trade. Though, the Chinese market was still not picking up despite the country setting an annual economic growth target of 7.5 percent, unchanged from 2013.

Back home, boisterous benchmarks, resuming their northward journey after a day of pause, staged an enthusiastic performance on Tuesday, by rallying over a percentage point crossing lots of psychological levels in their northward rally. Sentiments remained positive since beginning of the trade and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength, as investors continued hunt for fundamentally strong and oversold stocks. The rally came mainly after Russia’s President Vladimir Putin ordered his troops back to base, raising hopes of a peaceful solution to the recent geopolitical tensions in Ukraine. Investors also remained optimistic on reports that the government is considering a proposal to allow companies to issue depository receipts like ADR and GDR against debt instruments, in a bid to deepen financial markets. Northward journey got extended after European markets made a gap-up opening, Asian markets too ended higher. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Frontline indices managed to settle at their one month high levels with Sensex surpassing its crucial 21,200 bastion, while Nifty ended near its crucial 6,300 mark. Recovery in Indian rupee too supported the sentiments. Meanwhile, stocks related to construction and railways sector edged higher as the cabinet note on allowing foreign direct investment (FDI) in the railway and construction sectors has been cleared. The Department of Industrial Policy and Promotion had proposed relaxation of FDI norms in the construction sector and 100 percent FDI in the railway sector. Finally, the BSE Sensex surged by 263.08 points or 1.26%, to settle at 21209.73, while the CNX Nifty gained 76.50 points or 1.23% to settle at 6,297.95.