Indian markets to extend the positive momentum with a green start

The Indian markets surged on Friday with major indices gaining over two and half a percent. Apart from the European leaders measures to tackle the debt crisis in the region, the strengthening of rupee on the domestic front boosted the sentiments of the local investors. Today, the start is likely to be in green though there will be lots of factor guiding the market trends later in the day. There will be buzz in the auto sector stocks based on their monthly sales performance, leading auto maker; Tata Motors has reported a 3 percent drop in June auto sales. Cement companies too will be announcing their monthly sales and despatches number. There is likely to be buzz in the retail related stocks too as, the government plans to give a big push to foreign direct investment in multi-brand retail after the presidential polls this month. Meanwhile, the telecom stocks may come under pressure as the department of telecom is preparing to seek an extension of the August deadline for the auction of spectrum from the Supreme Court if the panel of ministers fails to finalise spectrum pricing issues by this week. There will be some stock specific movements too, as Kingfisher Airlines is facing fresh pressure from lenders and airport authorities and in a latest development ICICI Bank has sold its entire debt in the near bankrupt airline.

The US markets surged on Friday logging their best month of the year, investors overlooking the weak economic data went for buying after the decision of European leaders to lower the borrowing costs of Italy and Spain and create a single supervisory body for euro area banks. The Asian markets have made a positive start and barring some somberness in the Chinese market other indices are trading with good gains on European leaders measures to ease the region’s debt crisis and on a survey report showing Japanese manufacturer became less pessimistic in the month of June. However, the Chinese market is slightly soft as country’s manufacturing expanded at the weakest pace in seven months. Its PMI fell to 50.2 in June from 50.4 in May.

Back home, after three consecutive days of consolidation, stock markets in India displayed a maverick performance as market bulls desperately waited for significant upside triggers to open fresh positions on first day of the new Futures and Options series. The frontline equity indices rallied vehemently by over two and half a percentage points and not only extended their gaining streak for the fourth successive session but also soared to highest levels in more than two-months. After the gap-up opening, the frontline gauges managed to capitalize on the momentum and kept garnering from strength to strength to reclaim the important psychological 17,400 (Sensex) and 5,250 (Nifty) bastions. Sentiments remained sanguine since the start of trade as domestic markets rallied in tandem with their Asian peers after some heartening developments surfaced from the Euro-zone Summit. Concerns over the Euro-zone’s onerous debt trouble got allayed after reports indicated the leaders in Euro-zone decided to create a single supervisory body for Euro-zone banks and to allow them to be recapitalized directly by the currency area's rescue fund without adding to government debt. Moreover, European Council chairman Herman Van Rompuy’s comments that nations that were meeting the terms with European Union budget policies would be able to access the bloc's temporary EFSF and permanent ESM rescue funds to support their government bonds on financial markets, fortified sentiments globally, prompting tentative recovery in investors’ appetite for riskier assets like equities. Back home, market participants remained in cheerful mood hoping that the government would soften its stand on contentious taxation issues and bring in more clarity in the controversial General Anti Avoidance Rules (GAAR) provisions. Furthermore, market participants also drew some solace from supportive money market cues after Indian rupee, which has so far been the worst performing currency in Asia, appreciated to sub 56 levels against the US dollar. The power sector stocks too shot up by over three and half a percent after reports highlighted that Central government will incentivize power distribution companies’ performance while they also opined that around 50% of discoms’ loan burden will be shouldered by states. Though largely across the board buying was evident, investors were seen exerting some selling pressure on individual names like Cairn India on the back of sharp drop in international crude oil prices and also on BPCL due to overnight cut in petrol prices. Finally, the BSE Sensex jumped 439.22 points or 2.59% to settle at 17,429.98, while the S&P CNX Nifty climbed by 129.75 points or 2.52% to close at 5,278.90.