 "Markets have a decent start; Nifty reclaims 7250")
The markets have bounced back this morning after ending virtually unchanged on Friday. The Sensex is quoting at 24,337, higher by 119 points and the Nifty is at 7,269, up 39 points. There is outperformance on the broader market front, with the midcap index at 8562, higher by 95 points and the smallcap index at 9090, up 75 points.
The benchmark indices had ended virtually unchanged on Friday on the way to shedding nearly two per cent last week as investors booked partial profits in large-cap stocks after a three-week winning streak.
The markets will keenly watch the RBI policy announcement on Tuesday, the first monetary policy meet after formation of the new government. The announcements by new government, especially on the reform front, are also likely to set the tone for the equity bourses in the new week. Moreover, the week ahead will see the markets reacting to the April fiscal deficit and gross domestic product numbers announced on Friday after market hours. And, to the MSCI Index rebalancing, to come into effect from Monday. The monsoon will also be a factor, given that India is a pre-dominantly agricultural economy; the rains will reach the Kerala coast by June 3, according to the Indian Institute of Tropical Meteorology (IITM).
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Technical analysts say the Nifty has started showing signs of weakness, indicating possible downsides ahead. In the week ahead, the Nifty is likely to find support at 7,050-levels and on the upper side it could find resistance at 7,340. If it sustains beyond that, the Nifty could go further up to 7,400-levels, they said.
On the global front, Asian equity markets are trading higher this morning following record highs for the S&P 500 and the Dow Jones last week and mixed Chinese data. Japan's Nikkei has risen 1.7% or 253 points at 14,885, Singapore's Straits Times is up 0.1% at 3,300 and South Korea's Seoul Composite has added 0.1% at 1,998. The financial markets in China, Hong Kong and Taiwan are shut Monday for the Dragon Boat Festival. The Dow Jones industrial average had closed up 18 points at 16,717 ansd the S&P 500 had gained three point to 1,923 on Friday.
On the economic front, the rupee slipped in the early trade on Monday. It opened lower by 18 paise at 59.27 per dollar versus Friday's closing value of 59.09 a dollar.
L&T has soared by 4.2% at Rs 1614 to top the gainers list on the BSE on the back of a stellar set of numbers. The dcompany's net profit surged 69% to Rs 2723 crore on a 11% growth in gross revenue to Rs 20229 crore in Q4 March 2014 over Q4 March 2013. Infosys is seeing some value buying, firming up by 1.5% at Rs 2986. News reports that former SAP board member Vishal Sikka is certain to be chosen as the new CEO of Infosys would have also perked up the sentiment on this beleaguered counter. The auto pack is also attracting some buying interest; Baja Auto has gained 1% at Rs 1973 and Maruti Suzuki has added 0.9% at Rs 2289.
On the other hand, Hindustan Unilever is witnessing profit-booking after running up by around 7% in Friday's session. The other FMCG giant ITC has edged lower by 0.4% at Rs 340. Sesa Sterlite, M&M and TCS have lost in the region of around a percent each.
The market breadth is strong. Out of 1436 stocks traded on the BSE, there are 1000 advancing stocks as against 392 declines.