Positive Global Cues

Indian equity indices witnessed consolidation yesterday as markets ended with marginal losses, amid a lackluster trading session, as investors booked profits after the sharp rally for three consecutive sessions which saw the Sensex and Nifty hitting fresh record highs. The losses were led by oil and gas shares. Sensex ended down 17 points at 25,823 and Nifty closed 10 points down at 7,714 levels. The broader markets closed in tandem with their large counter parts- BSE Midcap and Smallcap indices lost 0.06% and 0.10%, each. The market breadth in BSE ended marginally negative with 1,476 declines and 1,286 advances.

Amid this, trading at the Bombay Stock Exchange came to a halt because of connectivity issues. After being shut from 9:30 am, BSE held a new pre-opening session at around 12:45 pm. Further Capital market regulator Securities and Exchange Board of India (SEBI) has sought a reply from the BSE, which had shutdown all markets due to a network outage.

There was one positive factor that emerged, activity in India's services sector grew at its fastest pace in well over a year in June as new business poured in, adding to signs of a pick-up in the economy even as inflation remains high. The HSBC Services Purchasing Managers' Index, compiled by Markit, jumped to a 17-month high of 54.4 in June from 50.2 in May.

Another positive factor was, INR was trading at 59.70 after hitting 59.52, its highest level since June 13 and higher than the previous close of 59.6875/6975 as foreign banks continue to sell dollars on behalf of overseas investors.

As for global markets, everyone was waiting for data on US jobless announcement. U.S. employment growth jumped in June and the jobless rate closed in on a six-year low, decisive evidence the economy was growing briskly heading into the second half of the year. Nonfarm payrolls increased by 288,000 jobs last month and the unemployment rate fell to 6.1 percent from 6.3 percent in May, the Labor Department announced. Data for April and May were revised to show a total of 29,000 more jobs created than previously reported. With a positive data the Dow surged above the psychological 17000 mark to close at 17068 ((up 0.54%) and S&P closed at 1985 (up 0.54%).

Taking cues from US markets, even the Asian markets are trading in green. Nikkei is trading in green with gains of 0.62% followed by Straits Times (up 0.42%). Even Hang Seng is up 0.40% and Shanghai Composite is almost trading flat.

With most of the Asian peers providing positive cues, even the SGX Nifty is trading in green with gains of 0.20%. We expect Indian equities to open on a positive note and then remain range bound in early hours of session. Overall we expect a positive closing for the week.