Markets to remain in consolidation mood with a cautious startV

The Indian markets witnessed a trend reversal in last session and the major indices turned volatile on the very first day of the F&O expiry week. There were lots of long positions unwinding that took the markets lower from the new highs and traders also turned cautious ahead of the swearing in and portfolio allocation of the new government. Today, the start is likely to remain cautious as Narendra Modi is still keeping his ministers guessing on portfolio allocation. Though, most of the names must be finalized and might be announced after the first Cabinet meeting today, investors are now awaiting pro-business policy action to make the next round of purchases. Meanwhile, there is a reason to cheer for the markets, as the Reserve Bank of India has reported that helped by a sharp moderation in imports, especially of gold, India's current account deficit (CAD) sharply narrowed to 1.7 percent of GDP, in FY’14 from 4.7 percent in FY’13. Traders will also be eyeing the weakness in rupee and the movement in export oriented stocks. The domestic currency logged its sharpest drop in about a month on dollar demand by importers. There will be some buzz in the non-banking finance companies (NBFCs), as the Reserve Bank of India has tightened merger rules for NBFCs, requiring them to obtain the RBI permission to acquire or merge with any similar entity. There will be some important result announcements too, to keep the markets in action. Bharat Forge, Bombay Dyeing, Container Corp, Dish TV India, Jaiprakash Associates, Jet Air India, OIL India, Power Finance, Prism Cement, Ricoh India, Shriram Epc, Sical Logistics and Thermax will be among many to announce their numbers. The US markets remained closed for a holiday, unable to give any cues to the other global markets. The Asian markets have made a mixed start, though most of the regional indices climbed for a fourth day on prospects policy makers will act to support global economic growth. Back home, what looked as splendid session in morning deals, turned out to be merely a flat one amid volatility, as investors opted to cash out profits at higher levels ahead of key cabinet portfolio allocation that are likely to be announced post swearing-in ceremony of the new government. After a gap-up opening, benchmarks fervently gained from strength to strength to surpass their crucial 25,000 (Sensex) and 7,500 (Nifty) levels. Sentiments also remained buoyed with a FICCI survey, which has said that 93 percent out of the 76 CEOs covered by it, project a substantial improvement in the near-term economic situation with the Narendra Modi-led new government taking charge at the Centre. Some support also came after an Assocham study indicated that riding on huge expectations from the incoming Modi government, foreign investment inflows are estimated to more than double to $60 billion level this fiscal. However, immense volatility was witnessed in last leg of trade and markets took U-turn with frontline gauges witnessing sharp selloff due to emergence of profit-booking in realty, power, consumer durables and oil & gas counters. Though, domestic bourses staged smart recovery to end flat after hitting fresh intraday low in dying hour of trade. Global cues remained supportive with European markets trading higher in early deals, while Asian shares touched one-year high on Monday. Back home, select infrastructure companies especially those involved in road-construction were among the top gainers after the National Highways Authority of India, responsible for development, maintenance and management of NHs, recently allowed nine of the stressed 23 road projects to reschedule their premium payments, a development that can revive stalled road works and attract investments. Stocks related to software and technology counters too remained on buyers’ radar on the back of upbeat US home sales data signaling signs of an uptick in the world's largest economy. Finally, the BSE Sensex gained 23.53 points or 0.10%, to 24716.88, while the CNX Nifty was down by 8.05 points or 0.11%, to 7,359.05.