Markets to extend the rally mood with a good start

The Indian markets recovered in the final hours to make another day of gain in last session. Today, the start is likely to be in green tailing the good global cues, on the domestic front after a day of RBI keeping its rate unchanged, a Labour Ministry report may sooth the sentiments further. It has been reported that retail inflation for industrial workers eased to a two year low of 6.73 percent in February due to softening of prices of food items. Also, as the corporate India believes that the country’s economy could resurge to grow 6.5% this year if a strong reform-minded government comes to power after the upcoming parliament elections. There will be some buzz in the money markets after their long weekend with RBI maintaining status quo and as Securities and Exchange Board of India (Sebi) has directed that all trades in securitised debt instruments and over-the-counter (OTC) trades in corporate bonds will have to be reported within 15 minutes of the transaction from Tuesday, April 1. Meanwhile, the finance ministry has released a draft Direct Taxes Code (DTC), focused on raising more revenue from high net worth individuals, while leaving the slabs unchanged for others. There will be buzz in the banking license hopefuls too, as the Election Commission has given a go-ahead to the RBI over approvals for new banking licences.

The US markets bounced back and ended higher in last session with S&P 500 closing at record high on the back of a relatively upbeat reading on US manufacturing activity in the month of March. The Asian markets have made a jubilant start with the regional benchmarks extending their winning streak to a sixth day led by the Japanese market, which was up by over a percent with constant fall in yen.

Back home, Indian equity benchmarks started the new financial year slightly on the positive side, extending the gaining streak for the fifth straight day. The bourses went through volatility where benchmarks, which made gap-up opening, slipped into red for a couple of times during the session. Buying in late trade mainly acted as saving grace for domestic equity markets and helped them to regain their crucial 6,700 (Nifty) and 22,400 (Sensex) bastion. Sentiments remained up-beat with Finance Minister P Chidambaram’s statement that the current account deficit (CAD) is likely to be $35 billion in 2013-14. However, gains on the up-side remained capped after the Reserve Bank of India (RBI) in its first bi-monthly monetary policy decided to hold the key policy rate or the repo rate at 8 per cent but cautioned that inflation risks could resurface. Sentiments also remained dampened after the expansion in the manufacturing sector moderated in March, after a year-high growth in the previous month. The PMI manufacturing dipped to 51.3 points in March from 52.7 points in February, when it was at a year high, indicating moderate growth. Global cues remained supportive, while the Asian markets ended mostly in the green after China’s official PMI survey showed manufacturing managed to continue expanding in March. European markets too supported the sentiments by edging higher in early deals. Back home, rally in software and technology counters too supported the up-move. Fertilizer stocks too remained on buyers’ radar after election Commission (EC) approved to hike urea fixed price by Rs 350/ million tonne (mt). Additionally, shares of sugar manufacturer Andhra Sugars, Balrampur Chini Mills, Bajaj Hindustan, EID Parry, Rana Sugars etc. all edged higher on expectations of higher demand during the summer season from bulk consumers such as ice-cream makers in the spot market. On the flip side, shares of public sector oil marketing companies edged lower after the price of petrol was cut by Rs 0.75 per litre, while the monthly hike in diesel rates was put off during the election season. Finally, the BSE Sensex gained 60.17 points or 0.27%, to settle at 22446.44, while the CNX Nifty added 16.85 points or 0.25% to settle at 6,721.05.