Markets likely to get a flat-to-mildly positive start

Indian markets rallied on Monday supported by global cues and the major indices neared their three months high, heavy weight Reliance Industries was seen propelling the markets, also there was some optimism among the traders with new Finance Minister’s assurance to boost the sentiments. Today, the start is likely to be in green, though there won’t be rally like situation but markets are likely to add strength in early trade. There is a political event, after which the government is expected to take some reform measures. Vice Presidential election are scheduled today and the ruling UPA looks all set to sail through with incumbent  Vice President Hamid Ansari getting a second term. Though, Finance Minister P Chidambaram announcement to relook at retrospective amendments to the Income Tax Act will be working in favour of the markets, but the Reserve Bank of India too saying that concerns over policy paralysis must be addressed, may make the investors cautious.

There will be some important result announcements too, to keep the markets buzzing. Aurobindo Pharma, Balrampur Chini, Bombay Dyeing, Great Offshore, J&K Bank, Linc Pen, MOIL, NHPC, Panacea Bio, Punj Lloyd, Sobha Developers, Tata Chemicals, VIP Inds are among the many to announce their numbers today.

The US markets extended the rally mood of last week on Monday on hope of more European Central Bank assistance for the troubled euro zone, as European Central Bank (ECB) President Mario Draghi said the ECB plans to buy short-dated bonds to lower borrowing costs to help Europe. Most of the Asian markets have made a positive start as European debt crisis seemed easing after Germany backed a European Central Bank bond-buying plan. The Japanese market was trading up by over half a percent despite yen remaining stronger against its major peers on speculation that the Bank of Japan will refrain from additional monetary easing at its policy meeting tomorrow.

Back home, buoyed by jubilant global cues, Indian key benchmarks vivaciously rallied well over a percent on Monday. The frontline indices surged on large volumes as investors’ appetite for riskier asset classes like equities got a boost, after stronger than expected US payroll data and some positive cues from Euro-zone. After fall in previous two sessions, euphoric investors resorted to hefty across the board bottom fishing, taking the frontline gauges beyond the psychological 17,400 (Sensex) and 5,280 (Nifty) levels. Moreover, continued buying in index heavyweight Reliance Industries (RIL) too supported the markets to keep their bull run throughout the day. Meanwhile, the stock of RIL edged higher by over five and a half percent on the buzz that the company has agreed to share the KG-D6 accounts with the national auditor under the terms of the production sharing contract (PSC), ahead of a crucial meeting of the block’s management committee. The sentiments were also supported by telecom stocks like Idea Cellular, Bharti Airtel, Reliance Communication and MTNL in early trade, which edged higher as government fixed the minimum price at Rs 14,000 crore for 5 units of GSM airwaves in the 1800 MHz, the panel of ministers on spectrum, headed by finance minister P Chidambaram, will meet today to consider a revised timeline for the spectrum auctions, as the government may not be able to meet the deadline for completing the sale process by this month-end. Though some profit booking in mid noon trades brought the key indices lower, but the gauges recovered soon after European markets turned green after opening in negative terrain as investors grew cautious over the prospects of a bailout for Spain, with its 10-year bond yields holding close to 7% danger levels. On the BSE sectoral space, oil and gas sector remained the major gainer, gaining over three percent led by Reliance Industries on report that benchmark Singapore gross refining margins (GRM) have strengthened from the 2nd week of July 2012 to average at $8 a barrel from $6.7 a barrel in the quarter ended June 2012. Moreover, Metal space too edged higher by about a percent as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.64% on August 3, 2012. The BSE Sensex surged 215.03 points or 1.25% to settle at 17,412.96, while the S&P CNX Nifty soared by 66.85 points or 1.28% to close at 5,282.55.