Markets to get a positive start extending gains of last session

The Indian markets showed some sign of recovery and ended modestly higher in last session; however traders were not confident and preferred to book profit at every upmove. Today, the start is likely to be in green and bourses may strengthen further. Marketmen may get some support with C Rangarajan, Chairman, Prime Minister’s Economic Advisory Council (PMEAC) statement that with gold imports slowing down and inflation levels showing signs of decline, the country’s current account deficit (CAD) is expected to be around 2 per cent of the GDP in the coming few years. There will be some buzz in the banking stocks, as the credit rating agency CARE Ratings has said that banks will have to be cautious when it comes to growing their commercial real estate (CRE) and home loan portfolios, given the vulnerability of this sector in terms of asset quality. There will be some buzz in the aviation stocks too as in a first, SpiceJet has announced that it would compensate passengers for any flight delays or cancellations arising out of reasons in the airline’s control, which may force peers to follow the suite.  There will be lots of important result announcements too, to keep the markets in action. Alembic, Gati, Gillette India, Gujarat Pipavav, HDFC, Titan, Ushdev Intl and Vijaya Bank will come up with their numbers. The US markets ended modestly higher in the last session on an upbeat report on service sector activity; however the continued clashes between Ukrainian armed forces and pro-Russian militants in the eastern part of the country capped any major upside. The Asian markets are trading mixed with some of the major indices shut for the day. China’s Shanghai Composite Index swung between gains and losses. Back home, Indian equity benchmarks, snapping five days losing streak, ended the session slightly in the green. Sentiments remained up-beat on report that foreign institutional investors (FIIs) have tightened their grip on the Indian equity market. Average FII stake in 489 companies from the BSE-500 index shot up by 30 basis points to 19.9% in the quarter ended March 2014 from 19.6% as at end of December 2013 quarter. Meanwhile, FIIs bought shares worth a net Rs 386.95 crore on May 2, 2014, as per provisional data from the stock exchanges. Markets after a tepid opening picked up pace and edged near their crucial 22,600 (Sensex) and 6,750 (Nifty) levels but investors turned cautious and booked profits at higher levels as reports suggested that the recent rally seems to have run ahead of fundamentals. The current market rally has been building up on hopes that the BJP-led NDA alliance emerging victorious in the Lok Sabha elections. Gains also remained capped on report that latest estimates worked out by the Planning Commission expects that the Indian economy’s annual average growth rate may not exceed 6 percent during the 12th Five-Year Plan (2012-17), compared with the target of 8 percent. Global cues too remained sluggish with European markets trading lower in early deals, while Asian markets too ended mostly in the red. Back home, some support came from rally in Oil & Gas counter with HPCL stocks scaling its 52 weeks high level and BPCL spurting around a percent. Banking stocks also remained on buyers’ radar after Canara Bank reported its fourth quarter earnings. The bank posted 15.79% fall in its net profit at Rs 610.83 crore for the quarter ended March 31, 2014, though stocks moved higher by over 6% after the bank said its net non-performing assets (NPA), as a percentage of total assets, declined to 1.98% in March quarter from 2.39% in the previous quarter ended December 2013. On the flip side, stocks of software pack sank after rupee appreciated for fourth consecutive session and strengthened near 60/$ level, in intra-day trade. Finally, the BSE Sensex gained 41.23 points or 0.18%, to 22445.12, while the CNX Nifty was up by 4.55 points or 0.07% to 6,699.35.