Markets likely to add up to their gains with a positive start

The Indian markets fought back in last session and after a gap down opening and remaining in red for most part of the day, ended marginally higher. Today, the start is likely to be in green and the indices may extend their gains as Prime minister has finally stepped in to assuage investors concern and has convened a meeting on Wednesday to review big-ticket infrastructure projects. However, finance minister Pranab Mukherjee, citing the stressed fiscal situation has virtually ruled out a stimulus to revive the dwindling economy. Though, the rate sensitive will continue their high spirit going after RBI’s signal that it may further cut interest rates later this month. The apex bank citing the recent drop in banks' daily borrowings from the RBI and steady overnight cash rate has said that liquidity in India's banking system is in 'comfort zone' as of now. The telecom sector stocks too will keep buzzing as an empowered group of ministers (EGoM) headed by Finance Minister Pranab Mukherjee, will meet today to decide on the base price for the much-awaited auction of telecom spectrum. Telecom Commission (TC) in its last meeting has left the decision on the EGoM for fixing the spectrum price to be auctioned, and asked Telecom Regulatory Authority of India (TRAI) Chairman to analyse the reserve prices proposed earlier and their impact.

The US markets ended flat after witnessing a very volatile day of trade. Most part of the trade remained subdued after getting a report of larger-than-expected drop in factory orders that compounded concerns over a stagnating job market. The Commerce Department reported that April factory orders dipped to 0.6% from a downwardly revised decline of 2.1% in March. In Europe too, the situation remained more or less the same with German Chancellor Angela Merkel pressing for much more ambitious measures to deal with the eurozone’s financial crisis. The Asian markets have made a decent bounce back after last session’s butchery, as Chinese Services PMI data came slightly better and investors are expecting the policy makers to take some stimulus measures to revive the economy.

Back home, On a day when most stock markets across the Asian region went home with nasty lacerations of over two percentage points, the only major equity indices which weathered the storm resiliently were India’s Sensex and Nifty, which settled with marginal gains on Monday. The benchmark equity indices were brutally pounded in the start of trade when they got a gap down opening and drifted to the lowest point of the day in no time as sentiments were spooked by terrifying over the weekend cues from US, the exacerbating financial crisis in Euro-zone and sharp slowdown in China and prompted investors to flee from riskier asset classes like equities. The market participants witnessed a trend reversal in early noon trades when the frontline gauges found support around the psychological 4,800 (Nifty) and 15,800 (Sensex) levels and started their skyward journey thereon. Investors drew solace from comments of Reserve Bank of India’s deputy governor Subir Gokarn who indicated that the Reserve Bank in its mid-quarter policy review on June 18 has some room to reduce policy rates to bring Asia’s largest economy out of the doldrums following moderate core inflation and soft global oil prices. Meanwhile, the rupee, Asia’s worst performing currency, reversed its early losses and traded on a flat note in line with Friday's close against the US dollar due to selling of dollars by banks and eased some concerns. Stocks like Spice Jet and Jet Airways from the Aviation basket skyrocketed amid reports that the aviation ministry is mulling over abolishing service tax on air tickets and reducing sales tax on aviation fuel from an average 25% to a uniform 4%, proposals that may not only nurse bleeding carriers back to profits, but also rein in soaring fares. Fertilizer manufacturers’ shares too gained traction in the session ahead of arrival of the monsoon season, which will boost demand for fertilizers. On the BSE sectoral front, investors were seen covering hefty short positions in the Capital Goods counter, which jumped over two percent and remained the top gainer in the space while the rate sensitive and Oil & Gas pockets too went home with notable gains. On the flipside, the Consumer Durables sector along with defensive FMCG pocket got battered in the session. Finally, the BSE Sensex rose 23.24 points or 0.15% to settle at 15,988.40, while the S&P CNX Nifty gained 6.55 points or 0.14% to close at 4,848.15.