Markets to extend gains with a positive start

The Indian markets continued their rally with over half a percent of gains in last session, supported by continuous buying by the FII’s. Today is the penultimate day of the F&O series expiry and though the start is likely to be good, some volatility may appear in the latter part of the trade. Election euphoria will keep playing its part with international credit rating agency Crisil saying that a stable government post-elections is likely to help the country grow at an average of 6.5 percent for the next five years. However, Crisil said it is not the election results which impact the economy, except in improving sentiment, but policies formulated by the new government that will boost growth. The pharma stocks will keep buzzing, as the Reserve Bank of India has said that the non-compete clause will not be applicable in acquisition of existing pharma companies by foreign entities or investors except in certain special cases. Under a non-compete clause a party agrees not to enter into a similar trade in competition against another party as part of a deal. The oil and gas stocks too may see some action as the Prime Minister's Office (PMO) has sought a status report from the Oil Ministry on issues around the implementation of the Cabinet decision of increasing the gas prices. There will be lots of important result announcements too, to keep the markets buzzing. HDFC Bank, Indiabulls Securities, Mahindra Lifespace, MRF, Rallies India, Tata Metaliks, VST Inds, Zensar Tech will announce their numbers today. The US markets extended their last week’s rally in last session, reflecting the upward momentum for the markets on getting some good earnings numbers and after Conference Board said its leading economic index rose by 0.8 percent in March. Asian markets have made mostly a positive start. Japanese market too was moving higher as yen extended losses, boosting the outlook for exporters. Back home, Monday’s session was another fabulous day of trade for the Indian equity markets, which scaled fresh high levels. Hectic buying activity which took place during last leg of trade drove the markets higher, with frontline gauges ending at their all time closing high levels of 22,750 (Sensex) and 6,800 (Nifty). Meanwhile, rally at Dalal Street also saw participation of broader indices, which outperforming larger peers, ended with profit of over a percent. Though, there was some cautiousness too with CRISIL’s report stating that it may not be easy for India to return to 9% growth during 2014-2019 and instead settle for an average 6.5% growth, provided there is a stable government at the Centre. On the global front, most of the Asian equity benchmarks ended in the red as tensions in Ukraine kept investors cautious amid an absence of catalysts as several markets remained closed for the Easter holiday. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Shares of capital goods companies like Larsen and Toubro (L&T), Bharat Heavy Electricals (BHEL), AIA Engineering and Pipavav Defence edged higher as foreign institutional investors (FIIs) continued their inflows in stocks of these companies on expectation that the policies of the new government at the centre would help kick-start the investment/capex cycle. Meanwhile, steel stocks remained on buyers’ radar after a report stated that global steel demand is likely to grow at a faster pace of 3.3 per cent this year, driven by rising demand for the commodity from India, Brazil, Russia, West Asia and North Africa. Additionally, hotel shares too witnessed some traction led by Hotel Leelaventure, which was up nearly 14% after the company said it is in talks with sovereign wealth funds of Abu Dhabi, Qatar and Malaysia to sell its prime properties in Delhi and Chennai for around Rs 1,850 crore to pare debt. Finally, the BSE Sensex surged by 135.99 points or 0.60%, to settle at 22764.83, while the CNX Nifty gained 38.25 points or 0.56% to settle at 6,817.65.