Markets to extend gains with a positive start; Nifty likely to start above 6550

The Indian markets closed modestly higher before going for a long weekend. Today, the start is likely to be in green and markets will move upwards from where they have left on Friday, taking cues from the global markets. The pharma sector stocks will be in action, as the foreign direct investment in the sector has more than doubled to $1.26 billion during the April-December period of 2013-14 fiscal amid concerns over increasing acquisitions of domestic firms by multinationals. Meanwhile, there will be some buzz in the manufacturing sector stocks as according to a study by Assocham, the manufacturing sector may create 3.2 million jobs during the 12th Plan period (2012-17). Some action is likely to be seen in the microfinance stocks, as the Microfinance Institutions Network (MFIN) has applied to the Reserve Bank of India to be recognised as the first self-regulatory organisation (SRO) for microfinance institutions. Today, there will be scrip specific actions too based on the advance tax payments, as the CBDT's extended three days time limit for payment of advance tax for the March installment will end today. 

The US markets made a good bounce back on bargain hunting and on a positive report showing a stronger than expected rebound in industrial production in the month of February. The Asian markets have made mostly a positive start tailing the gains in the US markets and some of the indices are up by about a percent rebounding from a five-week low.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Friday and ended the session slightly in the green, pairing all their early losses, supported by short-covering in beaten down but fundamentally strong stocks. The benchmark got off to a gap down start on the back of feeble global cues and extended their downfall to touch intraday lows. Sentiments also remained down-beat after the global rating agency Fitch slashed India’s FY14 GDP growth forecast to 4.7 per cent, lower than the official estimate of 4.9 per cent. Moreover, Fitch cut its real GDP growth forecasts for 2014-15 to 5.5 per cent and for 2015-16 to 6 per cent as investment remains subdued. The indices even went on to test important psychological 21,600 (Sensex) and 6,450 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon. Sentiments remained down-beat since morning after global markets witnessed a sell-off, as global concerns resurfaced after latest reports indicated that Russia’s Defense Ministry announced new military operations in several regions near the Ukrainian border on Thursday. Back home, buying which emerged in late trade mainly acted as saving grace for the equity markets and helped domestic gauges to re-conquer their crucial 6,500 (Nifty) and 21,800 (Sensex) bastions. Some support also came after annual rate of inflation, based on monthly WPI, which cooled off  to nine month low at 4.68% for the month of February, 2014 as compared to 5.05% in January, bolstered hopes that RBI would leave key policy rates on hold, if not slash them in its monetary policy on April 1, 2014. Meanwhile, pharma stocks rose on defensive buying in weak market, while shares of leading two wheeler makers also gained. On the flip side, software and technology stocks like, Wipro, TCS and HCL Technologies edged lower after Infosys issued weak revenue outlook for current quarter as well as next financial year. Finally, the BSE Sensex gained 35.19 points or 0.16%, to settle at 21809.80, while the CNX Nifty added 11.10 points or 0.17% to settle at 6,504.20. Indian markets remained closed on Monday on account of festival Holi.