Markets to extend the gains with a positive start

The Indian markets extending their bull run surged to a third consecutive record high in last session, on hopes of a stable business-friendly government after the results of the general elections are announced on May 16. Today, the start is likely to be in green and the euphoria may not recede anytime soon. However, there may me instances of profit booking and the traders will be cautious with Organisation for Economic Cooperation and Development (OECD) saying that India, China and other major emerging economies are expected to see weak growth even as momentum remains stable in the developed world. Meanwhile, the industry body Assocham has said that the formation of a strong and stable coalition government at the Centre augurs well for India’s economy. There will be some concern in manufacturing sector, as a Ficci survey has stated that growth in manufacturing sector is expected to moderate during the first quarter of the current fiscal due to slowdown in global demand for Indian products. On the other hand there will be some buzz in the oil & gas sector after an US Energy Information Administration (EIA) report said that India will overtake Japan to become the world's third largest oil consumer behind the US and China by 2025. There will be lots of important result announcements too, to keep the markets ticking. Asian Paints, Bajaj Finserv, Bajaj Finance, C&C Const, Gammon India, Geojit Bnp, Moser Baer, Mphasis, RCF, Tata Steel, Tech Mahindra are among the many to announce their numbers. The US markets ended mixed after a volatile trade in last session, though the Dow and the S&P 500 still ended the session at new record closing highs but trade remained lackluster. The sentiments were impacted by Commerce Department’s report showing weaker than expected retail sales growth in the month of April. The Asian markets have made mostly a soft start, though some of the indices are extending their rally too. Chinese market was marginally in red after country’s central bank called on the biggest lenders to accelerate the granting of mortgages. Back home, extending their gaining streak for the fourth straight session, Indian equity markets scaled fresh all time closing high levels, as exit polls predicted that the Modi-led NDA is set to cross the magic figure of 272 in the just-concluded elections. Hectic buying activity in blue-chip stocks during the session too drove the markets higher, with frontline gauges ending at their all time closing high levels of 23,850 (Sensex) and 7,100 (Nifty). Meanwhile, rally at Dalal Street also saw participation of broader indices, which traded in-line with larger peers, ending with profit of around one and a half percent.  At one point of time Sensex surpassed its crucial 24,000 mark, but profit booking dragged the market below that level. Some cautiousness too was witnessed in the markets on account of weak set of economic data. The Industrial production contracted for the second month running in March, while consumer inflation accelerated to a three-month high in April. IIP contacted 0.5% in March, compared with a 1.8% decline in February, while CPI inflation accelerated to 8.59% in April from 8.31% in March. On the global front, shares in Europe firmed up, tracking solid gains in US equities, moreover, the Asian markets ended mostly in the green as investors shrugged off tensions in Ukraine. 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. Appreciation in Indian rupee too supported the sentiments. Meanwhile, stocks related to Capital goods counters edged higher on hopes that the growth focused BJP-led NDA would unveil infrastructure reforms that would ultimately lead to new order inflows. Additionally, stocks related to public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC edged higher as diesel prices were on Monday hiked by Rs 1.09 a litre, excluding state levies. Finally, the BSE Sensex surged by 320.23 points or 1.36%, to 23871.23, while the CNX Nifty gained 94.50 points or 1.35% to 7,108.75.