Another Positive Opening On Cards

Indian equity markets seem to be in the middle of a big bull market. At least the way indices are moving northwards it appears so. Yesterday also all the leading indices witnessed a smart up-move with Nifty and Sensex closing at record high levels. While the Nifty closed above the 7700-mark for the first time ever, up 90.45 points or 1.18 percent to close at 7725.15 after hitting an intraday high of 7732.40, The Sensex rallied 324.86 points or 1.27 percent to end at record closing high of 25841.21 after hitting a day’s high of 25864.53. The surge was supported by across the board buying, continuing up-move for the fourth consecutive session. Broad based buying was seen front the fact that Small Cap and mid Cap index also witnessed a smart up-move of more than one per cent. We feel the optimism came in following Jaitley’s comments about fiscal consolidation. In our morning report we had categorically stated that the remarks by the finance minister about the fiscal prudence would get positive reaction.

While the remark by finance minister was one reason, rain god provided some amount of relief. Rather the Mumbai streets and railway routes were almost flooded indicating that there was good amount of rain. We feel arrival of rain in most of the parts in India will recede some worries on inflation front. Apart from that, initiatives taken by the government to curb the onion prices is likely to provide some amount of solace. Increased export prices of onions and curbs on hoarding, is likely to result in keeping the onion prices under some check.

Coming back to statements of Finance Minister, Arun Jaitley has made a massive pitch for fiscal prudence. Stressing on the need for fiscal consolidation, the FM said some tough decisions now will ensure faster recovery of the economy. He also warned that Iraq and the drought threat may throw revival plans off track. However, he remains optimistic that foreign investors now have a renewed interest in India and the current crisis may also provide us with opportunities.

On the global front, yesterday US stocks were little changed, after benchmark gauges closed at record levels yesterday, as private data showed companies added more workers than estimated in June before the government’s jobs report today. The Standard & Poor’s 500 Index (0.07%) rose less than 0.1 percent to 1,974.62. The Dow Jones Industrial Average added 20.17 points, or 0.1 percent, to 16,976.24. Both gauges extended closing records. US equity markets close at 1 p.m. today ahead of the Independence Day holiday. The private report precedes the Labor Department’s payrolls data today that may show nonfarm payrolls rose by 215,000 in June, according to survey by leading research agency. Data from employment to housing is fueling confidence that the world’s largest economy is rebounding after the worst contraction in gross domestic product since 2009.

As for the Asian markets, leading Asian stocks dropped, with the regional index retreating from a six-year high, as the dollar maintained gains versus major peers before the US payrolls report and a review of euro-area monetary policy. Nikkei is trading flat at 15369 (Down 1 point) and Hang Seng is also trading flat. Shanghai Composite is in red with loss of just 6 points.

SGX Nifty is however trading with gains of around 22 points extending its gains over the last three trading sessions. We expect another positive opening for the Indian equities today as FIIs are expected to continue buying.  So expect an extended rally for Indian equity indices today.