Markets To Open Positive On Big Bang Reforms

So the government has delivered what they said earlier, the big bang reforms. With many reform proposals being cleared by the government, we expect the market to start the day on a highly positive note. In the due course of the day also market will hold the gains.

The Indian government yesterday cleared FDI proposals as well as gave powers to the few regulatory bodies such as CCI. The cabinet yesterday unveiled second round of reforms and increased the FDI cap in insurance and pension from 26% to 49%. Government has also allowed the public insurance companies to list on the bourses with the stake of the government to be 51%. Besides it has also decided to modernize the companies act and forwards contracts bill.

In our yesterday’s morning notes we had mentioned that the government may clear these bills yesterday and also wrote that the market will remain positive. Well the round of reforms has been announced by the government and there would be a rally in the markets for next few days. What these reforms also indicate is that the government despite all the resistance is willing to go ahead with the reforms and not giving any chance to the opposition that the government did not do enough for the economy. The government has also approved 12^th five year plan yesterday that targets the infrastructure sector. The growth rate during this period has been targeted is 8.2% down from previously expected 9%.

The Finance minister and Sebi are also to announce some market friendly steps on Saturday that will further give positive indication to the market. Besides, HSBC’s PMI index showed that the services sector rose to seven month high to 55.8 points as new orders started coming in.

Earlier yesterday the market crossed the 19000 mark in many months and closed at 21 month high position. Today, the domestic cues are quite so that we expect global cues not to impact the Indian markets today.

The US markets yesterday closed with solid gains. The US job data showed that the applications for the jobless claims came in below expectations. On Wednesday the data showed that private sector created more jobs than expected.

The European markets yesterday mostly ended in flat to negative note as the European central bank (ECB) and Bank of England left the interest rate unchanged in yesterday’s meeting..

The Asian markets at this time are following the US markets job data. Nikkei and Hang Seng are showing gains while Shanghai is closed for whole week. SGX Nifty is showing positive trades sending green signals to the Indian markets.

On the currency front the rupee has kept running bullishly with about 10% appreciation so far. With the further FDI allowed we expect FII inflow to increase that will keep rupee on the positive note. Besides government may go for stake sale in some PSU and private companies that will reduce the fiscal gap.

In conclusion we believe that the market is set to achieve the next level target that is 20000 soon. We expect the market to be strongly positive today..