Markets to start the new financial year on a positive note

The Indian markets witnessed a slightly choppy last session of the passing fiscal, but managed to post modest gains, ending at fresh record highs. Today, the start of the new financial year is likely to be in green taking cues from the global markets; however traders will be keenly eyeing the Reserve Bank of India’s (RBI) first bi-monthly monetary policy statement for 2014-15. Though, the RBI is expected to keep its policy interest rate unchanged, despite retail inflation easing to a 25 month low in February. But if RBI Governor Raghuram Rajan springs a surprise it will direct the markets in that direction. Traders will be getting some support with Finance Minister P Chidambaram’s statement that the current account deficit (CAD) is likely to be $ 35 billion in 2013-14. Gold and jewellery stocks too may see some action, as the Finance Minister has said that the government will consider some relaxation on gold import in consultation with RBI after monetary policy. However, there will be some concern as well, as the fiscal deficit has widened to Rs 5,99,299 crore in the April-February period of 2013-14, or 114.3 percent of the target for the fiscal, compared to 97.4 percent during April-February a year ago. The PSU oil marketing companies may come under pressure with the decision of decrease in price of petrol by 75 paise per litre, while the monthly hike in diesel rates was put off.

The US markets posted good gains to end the first quarter on a solid note after Federal Reserve Chair Janet Yellen reassured investors on ultra-easy monetary policy and on hopes that China and Europe will be unveiling fresh stimulus measures. The Asian markets have mostly made a positive start after China’s official PMI survey showed manufacturing managed to continue expanding in March.

Back home, key domestic benchmarks ended the last trading session of FY13-14 at record highs with frontline gauges surpassing their crucial 6,700 (Nifty) and 22,350 (Sensex) levels on the back of continued buying interest of the foreign investors in the Indian equities. The bourses went through volatility where benchmarks, which made gap-up opening, slipped into red for a couple of times during the session. Buying which emerged in late trade mainly acted as saving grace for domestic equity markets and helped them to regain their green terrain. Overall sentiments remained up-beat on Economic Outlook Survey by FICCI, which pegged India’s economic growth to pick up and reach 5.5 percent in 2014-15, as industrial output will recover to expand at 3.3 percent. The industry body has also pegged the agriculture and services sector growth in the next financial year, at 3.3 percent and 7 percent respectively. Global cues too supported the sentiments with the US markets ending marginally higher in the last trading session on getting report of rise in consumer spending in February at the fastest rate since November. The Asian markets too ended mostly higher. Back home, sentiments got boost on report that, foreign institutional investors (FIIs) bought shares worth a net Rs 1362.87 crore on March 28, 2014, as per provisional data from the stock exchanges. Sentiments also remained up-beat as shares of public sector banks like Punjab National Bank (PNB), Bank of India (BOI), Bank of Baroda (BOB), Oriental Bank of Commerce (OBC) and Bank of Maharashtra continued their upward march on the bourses after Reserve Bank of India had relaxed the Basel III norms by a year. Shares of metal companies too remained on buyers’ radar on expectations that any move by China to step up infrastructure spending would boost demand for industrial metals. Finally, the BSE Sensex gained 46.30 points or 0.21%, to settle at 22386.27, while the CNX Nifty added 8.30 points or 0.12% to settle at 6,704.20.