Indian markets likely to get a modestly positive start of new week

The Indian markets after a rally on Friday, added modest gains on Saturday’s one and half an hour short trading session, both the benchmarks added over a quarter percent gains. Today, the start is likely to remain positive, though some profit booking too cannot be ruled out as after gaining around two and half a percent in last two sessions some traders may opt to take some profit off the table. The weakness in some regional peers too may weigh. However, traders will be eyeing the IIP data and inflation numbers to be announced later in this week. A late revival of monsoon may have narrowed the rain deficit to around 9% but it is unlikely to help boost food grains production and it is being said that there would be a decline in the overall food grains production. Government data has shown that share of agriculture in the Gross Domestic Product (GDP) has dropped by nearly 5 per cent in the last eight years to 14 per cent, due to higher growth in other sectors. The further development in the global markets too will be watched, as a survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci) has said that companies doing business in Europe are feeling the pinch of the crisis in the region. Apart from this, there will be lots of scrip specific actions to keep the markets buzzing.

The US markets extended the rally with modest gains on Friday despite weak jobs report, there were hopes of stimulus in next Fed meet that got bolstered with the jobs report. The Asian markets have made a mixed start though some of the indices that are in red, have marginally lost momentum due to their domestic issues. China was trading lower as country’s industrial output grew in August at the slowest rate since 2009, while Japan’s economy expanded in the second quarter at half the pace the government initially estimated.

Back home, Indian equity indices showed renewed enthusiasm as they vehemently rallied by two percent to end near intraday high, re-conquering the psychological 5,300 (Nifty) and 16,650 (Sensex) levels in the session. Hyperactive bulls aggressively piled up positions in not only heavyweight stocks but in the broader markets too, spurred by a world-wide rally in risky assets. There appeared no trepidation in the session either from the domestic or global front as market sentiment was buoyed after ECB President Mario Draghi announced an unlimited bond-buying plan to cut borrowing costs of highly indebted nations such as Spain and Italy. The gauges traded with an enormous traction throughout the session despite PSU OMCs reversing their intraday gains as fuel price hike hopes after the monsoon session of Parliament were quashed by Oil Minister’s statement. Petroleum Minister Jaipal Reddy stated that the state-run oil companies don’t have an immediate plan to increase fuel prices, sparked concerns about India's high fiscal and current account deficit. On the other hand, Auto stocks got plenty of relief on Oil Minister ruling out the possibility of immediate fuel price hike. The sentiments also remained higher supported by Metal stocks which strengthened global commodity prices rose on September 6, 2012, after European Central Bank took major steps to ease Europe’s financial crisis.  Global cues too remained jubilant as European counters traded in green in early deals after the European Central Bank outlined its bond buying scheme in an attempt to draw a line under the region's debt crisis. Back home, banking sector too provided spirit to the markets, surging over two percent tracking gains in global financials triggered by European Central Bank’s bond-buying plan which is aimed at lowering struggling euro zone countries' borrowing costs. Moreover, software stocks like, Infosys, TCS, Wipro, HCL Technologies and Tech Mahindra all edged higher after ECB took major steps to ease Europe's financial crisis. The Indian markets extended their gains on Saturday’s special trading session, BSE Sensex closed higher by 65.92 points or 0.37% to 17749.65, while the S&P CNX Nifty added 16.60 points or 0.31% to 5,366.30.