Friday 23 August 2013

Markets likely to get a flat-to-positive start on supportive global cues

The Indian markets witnessed a relief rally in last session with traders going for value buying in the bluechips. Though, the gains were not that convincing as the broader markets did not participated whole heartedly in the rally, still the start of the trade today is likely to be in green supported by the positive global cues. Marketmen may also get some strength with Finance Minister P Chidambaram’s statement, who in a bid to allay investors’ fears about the rupee falling 5.5 per cent in five days, said that though the currency is undervalued and has overshot appropriate levels, there is no need for "excessive and unwarranted pessimism." The rupee movement would be eyed too, as the sentiments still prevail week in the money market, while there will be some jitters on the housing and auto companies after two major private sector banks HDFC and ICICI Bank announced that they have increased their benchmark rates by 25 basis points. There will be some buzz in the media segment too, as the Telecom Regulatory Authority of India (TRAI) has recommended that the foreign direct investment limit in news channels and FM radio services be raised from 26% to 49%, subject to clearance by the Foreign Investment Promotion Board.

The US markets bounced back on Thursday mainly on bargain hunting, traders even overlooked the more than three-hour halt of trading on the Nasdaq which could have added strength to the markets. The positive manufacturing data out of China and Europe too boosted the morale of the traders. The Asian markets have mostly started in green with Japanese market taking lead by gaining over two percent in morning deals as the yen weakened against the dollar.

Back home, snapping four days downfall, Indian equity benchmarks finally got sigh of relief with frontline gauges recapturing crucial 5,400 (Nifty) and 18,300 bastions, gaining over two percentage points as firm European markets coupled with upbeat reading on Chinese manufacturing data aided to the positive sentiment. Earlier, markets witnessed extreme volatility with major benchmarks moving between green and red terrain in the first half as rupee slumped to fresh record low of 65.56 per dollar mark, dampening investors’ confidence. Sentiments mainly remained jittery after minutes from the Federal Reserve’s July policy meeting showed it was on track to start tapering stimulus as early as next month, sending Treasury yields to two-year highs. But, market started gaining strength in second half of the trade and entered into the green terrain as market-men opted to go for beaten down but fundamentally strong stocks. Firm opening in European markets too aided the sentiments; however all the Asian equity indices shut shop in the red. Back home, market continued to trade with traction in the last leg of trade as Indian rupee trimmed losses after hitting record low below 65 against the dollar. There was some buzz from report that the government is likely to clear the Direct Taxes Code (DTC) Bill 2013, which will bring in sweeping changes in the income tax regime, including a higher 35% tax for the super-rich and a wealth tax on a host of new assets such as expensive watches and paintings. Meanwhile, foreign direct investment (FDI) into India increased by about 16 percent year-on-year to $1.44 billion in June 2013, compared to $1.24 billion, though the numbers still are the lowest figure during the calendar year. Sentiments also remained up-beat after metal and mining stocks edged higher on a report showing that China’s manufacturing unexpectedly expanded in August. Steel shares were also in demand on reports that steel major JSW Steel will hike product prices by 4% to 6% from 1 September 2013, following a steep rise in raw material cost. Buying in software related stocks like Hexaware Technologies, Infosys, Wipro, MphasiS, Tech Mahindra and HCL Technologies too boosted the sentiments after rupee depreciated to over 65 per dollar mark. Finally, the BSE Sensex surged 407.03 points or 2.27% to settle at 18,312.94, while the CNX Nifty climbed by 105.90 points or 2.00% to end at 5,408.45.

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