Markets to see recovery tailing positive global cues

The Indian markets witnessed some profit booking in last session after massive rally seen in last few trades. Today, the start is likely to be in green and recovery can be seen in early deals, tailing global market cues. Traders will also be taking cues from an UN World Economic Situation and Prospects (WESP) 2014 mid-year update, saying that India’s economy would grow by 5 percent in 2014 and 5.5 percent in 2015  on stronger consumption and investment, up from 4.8 percent in 2013 and 4.7 percent in 2012. However, there will be some concern too, on reports of FII selling since last two days. Today the big gainers are likely to be the gold related stocks, as the Reserve Bank of India (RBI), on Wednesday, allowed star trading houses (STH) and premier trading houses (PTH) to import gold under the 20:80 scheme, which were introduced to combat a huge current account deficit (CAD) last year. There will be some buzz in the pharma sector too on reports that the Indian government will more than double the number of regulators in three years and set up state-of-the art testing labs at ports to ensure the pharmaceuticals and drugs exports shipments meet global quality standards. There will be lots of important result announcements too to keep the markets buzzing. Ashok Leyland, Binani Inds, Cummins India, India Glycols, IRB Infra, Jain Irrigation, Motherson Sumi, Novartis India, Sobha Developers, Suven Life will be announcing their numbers. The US markets bounced back in last session following the release of the minutes of the latest Federal Reserve meeting, which did not provide any indication that an interest rate hike is imminent. The Asian markets have made a positive start and some of the indices are trading strong in early deals, taking cues from the US markets and on a report showing China manufacturing gauge topped estimates. Back home, Indian equity benchmarks, snapping four days winning streak, ended the session slightly in the red, as investors took profits off the table in cyclical such as heavyweight banks and capital goods stocks. Earlier, markets after a flat but positive start, entered into negative terrain tailing weak global cues and extended their southward journey to breach the crucial 24,200 (Sensex) and 7,220 (Nifty) levels on report that foreign institutional investors (FIIs) sold shares worth a net Rs 104.53 crore on May 20, 2014, as per provisional data from the stock exchanges. Sentiments also got dampened after the Indian Institute of Tropical Meteorology’s (IITM) first experimental real-time monsoon forecast for this year predicted delayed monsoon. However, bargain hunting in blue chip stocks helped markets to trim some of their initial losses. Some solace also came after National Council of Applied Economic Research (NCAER) in its latest release said that the business confidence in last quarter of 2013-14 improved further on expectations of a new electoral mandate that influenced the overall sentiments. The BCI in March quarter rose by about 3.8 per cent from the previous quarter to 127 points. Global cues too remained sluggish with European counters trading largely in the red in early deals. Back home, depreciation in Indian rupee too dampened the sentiments. The rupee was trading at 58.74/75 at the time of equity markets closing versus its close of 58.63/64 on May 20, as state-owned banks bought dollars on behalf of importers. Selling in capital goods and banking counters remained the major losers on BSE sectoral front. Moreover, stocks of oil marketing companies like HPCL and IOC edged lower after Crude oil futures extended their gains on May 20, ending higher for a third straight session on growing concerns of possible supply disruptions from Russia amid the prevailing geopolitical tensions in Ukraine. On the flip side, depreciating rupee augured well for software companies as over 80% of their revenues come from exports to the US. Stocks like Infosys, TCS, HCL Technologies, Mindtree all edged higher. Finally, the BSE Sensex declined by 78.86 points or 0.32%, to 24298.02, while the CNX Nifty was down by 22.60 points or 0.31%, to 7,252.90.