Markets may show some stabilization after the euphoric rally

The Indian markets reached the pinnacle of the euphoria in the last session, though after an early surge there was stabilization in the bourses but they still managed decent gains. Today, the start is likely to be in green but some profit booking too can be expected after the passing of mega event. However, the FII movement will be majorly eyed and can guide the direction of the markets, as most global investors believe that India can see another round of re-rating as the elections have thrown up a stable government. Indian firms and business leaders too are enthused at the prospect of having a stable government and expect the Modi-led government to jumpstart a slew of reform measures and revive the economy to the levels of the 8-8.5% growth that they once saw. Industry body CII has 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. There will be some buzz in the coal and power stocks, as the Coal Ministry had extended the deadline to June 25 for companies submitting applications to participate in the competitive bidding for three mines. Banking stocks that have been on a run-up rally, too are likely to remain in action on an RBI data that bank deposits grew 14.8 per cent year-on-year to Rs 78,88,416 crore as of May 2, faster than credit growth. There will be lots of important result announcements too, to keep the markets buzzing. Ennore Coke, FCEL, Hindustan Fluoro, IL&FS Engg and Const, Reliance Infra, Reliance Power and Whirlpool are among many to announce their numbers today. The US markets recovering from lows ended higher in last session, though the economic news remained mixed but the traders lapped up the positive ones and rejoiced the report of rise in overall construction starts. The Asian markets have made a mixed start and some of the indices are in red led by the Chinese market on reports of reduced home-price gains. Back home, Indian equity benchmarks ended the session at their fresh record closing high levels as the Bharatiya Janata Party and its allies swept the election, although markets gave up a big chunk of the gains towards the close as investors booked profits at higher levels. Earlier, markets made gap-up opening and crossed the psychological 25,000 (Sensex) and 7,500 (Nifty) bastions in early deals, as early trends indicated the pro-reform and business friendly BJP-led NDA set to get a majority and form a stable government. Appreciation in Indian rupee against dollar too aided the sentiments. The Indian rupee gained sharply against the US dollar on hopes of further inflows from foreign institutional investors. But, markets pared around 3% of early gains on profit booking witnessed at higher levels in second half. Even though, frontline indices managed to settle at their fresh all time high levels with Sensex surpassing its crucial 24,100 bastion, while Nifty ended above its crucial 7,200 mark. Global cues remained sluggish with European counters opening lower and the Asian markets too ended largely mixed. 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. Meanwhile, financials were the top gainers on the Sensex on hopes that the BJP-led NDA would unveil reforms and stimulate economic growth. Power stocks continue to trade higher for second day in a row after the Centre announced a nine-member panel, which will identify more blocks, in addition to already selected 54 mines, for sale through competitive bidding to expedite coal auction process. Finally, the BSE Sensex soared by 216.14 points or 0.90%, to 24121.74, while the CNX Nifty surged by 79.85 points or 1.12%, to 7,203.00.