Markets Positive, Expecting Rate Cut

The Indian markets opened on a positive note today on hopes of a rate cut and strong positive cues from the Asian markets. The Sensex and Nifty are up by 0.80% and 0.83% respectively. The most awaited global event currently, i.e. the Greek election results, have come in favour of the markets. Also, the RBI will review its monetary policy today. This will be closely watched by the markets, which is expecting a rate cut. Among the BSE sectoral indices Realty, Metals and Consumer Durables are leading with gains of 1.72%, 1.64% and 1.64% respectively. All the other indices are trading positively with gains between 0.40%-1.62%.

The Greek election results, which were declared yesterday, indicated that the New Democracy party had gained 29.7% of the vote in the country’s second attempt to form a government in two months. The anti-austerity Syriza party was projected to finish second with 26.9% of the votes, followed by the formerly ruling Pasok party with 12.3%. The markets expect that the New Democracy and Pasok parties will probably join hands to hold the majority.

The other Asian markets opened on a strong positive note today post the Greek election results that have raised hopes of a bailout package for the country. Moreover, the concerns over Greece exiting the Euro zone have faded post the election results. The major Asian indices, Hang Seng, Nikkei and Shanghai, are trading higher by 1.53%, 1.79% and 0.69% respectively.

Back home, among the individual stocks, Nalco has jumped by 5% to Rs 61.10 on the back of news that the government has finalised a stake sale in the company, which will fetch Rs 12000 crore.

Most of the aviation stocks are trading higher on the back of news that the state-run oil marketing companies have slashed the prices of Aviation Turbine Fuel (ATF) by 5% effective from Jun 16, 2012.

Among the Sensex shares, index heavyweights BHEL, Hindalco, SBI and Tata Steel are leading with gains of 1.51%, 2.15%, 1.86%, and 2.61% respectively. Of the major losers, Cipla, Dr Reddy's Labs, HUL and ITC India are trading lower by 0.21%, 0.40%, 0.43% and 0.28% respectively.

The market breadth, which indicates the overall health of the market, is positive at the moment. On the BSE, 1452 shares have risen and 533 shares have declined. 77 shares are unchanged.

In conclusion, we expect the markets to remain volatile. They will decide the major direction once the RBI reviews its monetary policy. All hopes are pinned on the central bank now, which is expected to cut the Repo rate or the CRR to boost growth in the economy.