Market mood to remain sanguine on supportive global cues

The Indian markets strengthened further, extending their election euphoria and major bourses added about another a percent to their gains. Traders were taking cues from foreign brokerage houses revising upwards India’s FY16 GDP growth forecast, as they believe that the structural reforms to be undertaken by the new government would help India to accelerate its economic growth. Today, the start is likely to remain in green on sanguine global cues. IT and technology stocks may see some stabilization from their continuous fall, as there has been rally in global IT stocks, also the rupee too may stabilize as central bank’s continued dollar-buying has capped broader gains in the rupee despite it reaching the 11-month high. There will be some buzz in the banking stocks, as the ratings agency Moody’s has said that the recommendations by Reserve Bank appointed PJ Nayak committee to improve corporate governance structures at public sector banks are credit-positive for them. The rating agency said corporate governance characterised by poor board supervision and excessive government interference is a structural credit weakness of public sector banks. There will be some cheer in the PSU oil marketing companies on report that the loss on sale of diesel has fallen to Rs 4.41 per litre, helped by Rs 1.09 per litre hike and strengthening of the rupee against the US dollar. There will be some important result announcements too, to keep the markets buzzing. AIA Engineering, Care, Essar Oil, GTL, J Kumar Infra, Kolte Patil, Mangalore Ref, Punj Lloyd, Take Solutions, Welspun India and WABCO India will be among many to announce their numbers today. The US markets ended mostly higher despite a subdued trade in last session, as trader seemed reluctant to make significant moves amid a lack of major US economic data. Tech stocks provided the major support to the sentiments. Most of the major Asian markets have made a green start; Japanese market was trading higher, rebounding from a one-month low as the yen weakened. Back home, jubilation continued on Dalal Street with both the frontline indices snapping the session above their psychological 24,300 (Sensex) and 7,250 (Nifty) levels, ending at fresh all time closing high levels after BJP won clear majority in the country’s general elections. Boisterous benchmarks once again showcased an enthusiastic performance with investors getting support from report that FII’s made substantial purchases in Indian stocks on May 16, 2014. Though, markets after a gap-up opening pared all of their gains and entered into negative terrain for a brief period as profit booking was witnessed at higher levels. But, volatility ruled the roost as the key benchmark indices regained positive zone and thereafter not even an iota of profit booking was witnessed in the session, as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong but oversold stocks. Overall, sentiment remained upbeat, while some support also came after Industry body CII expressed hopes that the economic reforms agenda can be taken forward with a stable political dispensation and with a prudent macroeconomic management, the economy could recover to 6.5 per cent GDP growth rate in 2014-15 as against an estimated 4.9 per cent in 2013-14. However, global cues remained sluggish with European markets trading lower in early deals, while Asian markets shut shop mostly in the red. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Stocks related to railway such as Texmaco Rail and Engineering, Kalindee Rail Nirman, Titagarh Wagons, Kernex Microsystems and Hind Rectifiers remained on buyers’ radar on hopes that Bhartiya Janta Party’s Prime Minister designate, Narendra Modi will stand by his promise to improve the Indian Railways. Additionally, infra, realty and public sector undertakings (PSUs) counters too extended their past week’s rally. On the flip side, defensive sectors such as fast moving consumer goods (FMCG), information technology (IT) and pharmaceuticals lost sheen as investors shift their focus to infrastructure-related sectors. Finally, the BSE Sensex surged by 241.31 points or 1.00%, to 24363.05, while the CNX Nifty gained 60.55 points or 0.84%, to 7,263.55.