Markets to give up some gains from their last session's rally

The Indian markets broke out after a weeklong consolidation and surged to their fresh all time high in last session, on the back of continued buying of foreign institutional investors. Today, however there is likely to be some cautiousness and markets may make a mildly negative start, taking cues from the global markets and the domestic development, as the Election Commission has sought deferment of the price hike till elections are over. It has been reported that after deliberating gas pricing once again and taking into account government’s version, the EC decided to defer a decision on the contentious issue as the matter was pending in the SC. The Commerce and Industry Ministry too is concerned over whether its proposals for easing foreign direct investment (FDI) rules in railways and construction development sectors will get EC nod. However, there will be some solace too, as Economic Affairs Secretary Arvind Mayaram has said that the Finance Ministry expects economic growth to further improve in the next fiscal on the back of better macro-economic fundamentals. Also, the Central Board of Direct Taxes (CBDT) is hopeful of meeting the shortfall of Rs 54,000 crore to meet the revised estimate target set in February with less than a week to go before this fiscal comes to an end.

The US markets ended lower offsetting some strength that was seen last week after the release of a report from Markit Economics showing that US manufacturing activity fell by more than expected in March. The Asian markets have made mostly a soft start tailing the weakness in the US markets and investors weighed the prospect of a recession in Russia.

Back home, first day of F&O expiry week turned out to be a remarkable day of trade for Indian equity markets with both the frontline indices staging a stellar run by rallying over a one and a half percentage point to end near intraday high. Sentiments remained up-beat since start, as key bourses opened with decent gains and there appeared not even an iota of profit booking in the session and the benchmarks managed to fervently gain from strength to strength as investors continued their hunt for fundamentally strong stocks. Frontline indices not only extended their rally for second straight day but also recorded their fresh all time closing high which they never witnessed before, settling comfortably above their crucial 6,550 (Nifty) and 22,050 (Sensex) bastions as investors remained hopeful that the pre-election rally fuelled by foreign funds along with an increased participation from retail investors will drive markets higher in the near-term. Sentiments also remained buoyed on report that retail inflation for farm workers and rural labourers eased to 8.14 percent and 8.27 percent respectively in February from 9.08 percent and 9.21 percent in January, mainly due to decrease in prices of food items. Some support also came after Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence that whoever forms the next government would be in a position to implement key reforms, including the Goods and Services Tax (GST). On the global front, all the Asian equity indices shut shop in the green after the weak preliminary purchasing managers’ index of China for March from HSBC Holdings Plc and Markit Economics raised hopes that the country will go for more stimulus to revive the economy. Back home, banking shares remained on buyers’ radar on expectation that Reserve Bank of India (RBI) will hold key rates in its next monetary policy review as the Consumer Price Index (CPI) fell to a 25-month low in February. Stocks related to oil & gas sector too showed some resilience, led by gains in the heavy weight Reliance Industries. Meanwhile, the Petroleum Minister M Veerappa Moily has made it clear that the government will not go back on its decision to hike rates from April 1. Finally, the BSE Sensex surged by 300.16 points or 1.38%, to settle at 22055.48, while the CNX Nifty gained 88.60 points or 1.36% to settle at 6,583.50.