Markets momentum to continue; likely to add gains on sanguine cues

The Indian markets went for a huge rally in last session, not seen since early January, after Prime Minister Manmohan Singh stepped up to revive growth in the economy through infrastructure spending. Benchmark indices snapped the day with gains of around three percent. It was a broad based rally with everything making equal participation. Today, the start is likely to be in green and the markets will extend the rally mood in early trade. Adding comfort to the investors concern Finance minister Pranab Mukherjee has said that restricting fiscal deficit to 2% of the GDP is achievable and coupled with moderate rate of inflation the economy will revert back to high growth trajectory. However, the auto companies are likely to be in focus after the heads of major automobile companies met top finance ministry officials to protest the government move to increase the excise duty on diesel vehicles. The cable stocks too are likely to remain buzzing as the News Broadcasters Association has urged I&B ministry to stick to June 30 deadline for digitization.

Today, the market heavy weight Reliance Industries will keep guessing the investors ahead of its 30th annual general meeting on expectation that chairman Mukesh Ambani will make some announcement on utilising the company’s huge cash reserve.

The US markets got a rebound from recent selling on Wednesday and the major indices made their strongest day of 2012 on signs of moves in Europe firmed up to rescue Spain’s troubled banks. Reports came that German and European Union officials have sought solutions for Spain's weakened banks. Also there was good economy news, Federal Reserve said in its Beige Book summary that US economic growth picked up over the two prior months. The Asian markets have made an all green start advancing for the third straight day on hopes that global policy makers will take steps to revive the slowing economy. The Chinese market was trading higher after the government delayed plans to tighten bank capital rules to ensure lending support to its economy.

Back home, after all that dilly dallying in the start of the week, the Indian frontline indices have showcased a boisterous feat of registering biggest intra-day gains since January 3, 2012. It was one of those days when bulls went on rampage and the Sensex snapped the enthralling session with over a 434 points rally in an euphoric atmosphere after bottom fishing in fundamentally strong shares gathered greater force. Increasing hopes of some monetary easing by the European Central Bank and a rate cut by the Reserve Bank of India later this month, encouraged the market participants to catch the falling knife and trigger the reversal for the Indian stock markets, which off-late were getting accustomed to daily obliteration. The frontline indices managed to fire on all cylinders as sentiments remained buoyant across the board. After the gap-up opening in morning, the frontline gauges managed to capitalize on the momentum and even flirted with the crucial psychological 5,000 (Nifty) and 16,500 (Sensex) levels, signaling that bullishness may be returning to the markets on expectations that the markets have bottomed out. Sentiments remained sanguine since the start of trade as domestic markets rallied in tandem with their regional peers on the back of a slew of encouraging economy reports. The unexpectedly encouraging US services sector growth data and Australian GDP expansion numbers along with reports that the G7 nations agreed to coordinate their response to avert an onerous financial turmoil Europe Union, together fortified sentiments globally, prompting tentative recovery in investors’ risk appetite. Back home, market participants remained in cheerful mood hoping that the Reserve Bank of India and the central government would announce aggressive policy measures to reinvigorate the deteriorating economic growth. The rate sensitive Automobile counter witnessed relentless buying in the session as it jumped close to four percent and remained the top gainer in the BSE sectoral space on increasing hopes of monetary easing by RBI in its forthcoming mid-quarter policy review on June 18. Other rate sensitive sectors like Banking and Realty too settled with handsome gains of over two and half a percent. Finally, the BSE Sensex soared 433.66 points or 2.71% to settle at 16,454.30, while the S&P CNX Nifty jumped 133.80 points or 2.75% to close at 4,997.10.