Markets likely to extend the gaining momentum with a good start

The Indian markets after so much of volatility and a smart bounce back in last hour managed a positive close on Friday. Today, the start is likely to be in green with indices extending their momentum after the weekend, the effects of positive development from Spain is likely to spread to the region, however, Chief economic adviser Kaushik Basu has warned that if the Eurozone breaks up, it will hit India in the face, as the country is unlikely to have the strength to overcome that crisis. Traders will also be looking after different important economic data scheduled to be announced this week. Meanwhile, the PSU oil marketing companies may return to somber mood as the Finance Minister, during the weekend has given indication that petrol prices may come down further, on the same time the global oil prices have bounced back and Brent crude has topped $102/bl mark. Traders will also be eyeing the movement of rupee, which remained resilient in last session despite recovery in stocks. Commodities stock may get a bounce back tailing their global counterparts.

Meanwhile, in a survey conducted by the Confederation of Indian Industry (CII), major of the respondents felt that India’s GDP growth would fall below 6.5 per cent but would not go below six per cent, while 40 per cent of them expected it to nosedive to less than six per cent.

The US surged on Friday to make their best week of gains in the year on some optimistic indications from the Europe, also on domestic front the trade deficit remaining in line with estimates supported the market sentiments. Most of the Asian markets have made a positive start of the new week after Spain sought a bailout from Euro-zone governments to help shore up its banking system. Chinese markets too were trading in green after exports of the country beat estimates.

Back home, stock markets in India showcased a remarkable turnaround on the week’s last trading session as the frontline equity indices, after hitting the lowest point of day in mid noon trades, took a turn for the better, trimming the session’s around a percent losses and eventually settling with a green tick. The benchmark equity indices not only went on to accumulate the biggest amount of weekly gains in calendar year 2012 but also touched the highest point in around a month, sailing well beyond the psychological 16,700 (Sensex) and 5,050 (Nifty) levels. After the weak opening and reeling under severe selling pressure for most part of the day, not many had hoped that Indian bourses would stage such a bounce back especially on a day when stock markets across the globe wilted after Federal Reserve Chairman Ben Bernanke dimmed hopes for more stimulus measures to prop up growth in world’s largest economy. However, the downside in markets remained capped after reports showed that Chinese central bank unexpectedly slashed benchmark lending and deposit rates by 25 basis points in its bid to prop up flagging growth rate while giving banks additional flexibility to set competitive lending and deposit rates. The cues from European markets too remained pathetic as they were grinded lower after reports showed that German exports decreased more than expected and Spain’s debt rating downgrade to within two notches of junk. Back home, the domestic markets ricocheted around one and half a percent from the lowest point in session in the last leg of trade as investors relentlessly bought blue-chip stocks from the Capital Goods, high beta realty and Oil & Gas spaces. Meanwhile, the upside in markets was limited as investors’ hopes of monetary easing by RBI in its forthcoming mid-quarter policy review on June 18, were doused to some extent by comments of one of Reserve Bank of India Deputy Governor that interest rates in India were not too high to adversely impact economic growth. Sentiments also got undermined after money market woes resurfaced as Indian rupee snapped the four session appreciating streak and weakened against the US dollar. Finally, the BSE Sensex gained 69.82 points or 0.42% to settle at 16,718.87, while the S&P CNX Nifty surged 18.70 points or 0.37% to close at 5,068.35.