Indian Markets Sectors/Stocks Outlook for the week (02.JUL - 06.JUL.2012)
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RUPEE DESK: Indian Markets Outlook for the week (02 - 06.07.2012)
Key stock indices are likely to extend gains next week after the National Stock Exchange's 50-share Nifty closed decisively above the 5250-mark yesterday. Yesterday, the NSE Nifty ended at a two-month high of 5278.90, up 129.75 points or 2.5% from Thursday. The BSE's Sensex closed at 17429.98, up 439.22 points or 2.6%.Investor sentiment got a boost from the government's draft guidelines on the General Anti-Avoidance Rules detailed late Thursday as well as the surge in overseas markets after European Union leaders unexpectedly reached an agreement on relaxed conditions to help tackle the region's debt crisis. Yesterday, at the end of the two-day European Union summit, policymakers agreed that the European Stability Mechanism would be able to lend directly to banks to recapitalise them and without a preferential seniority status. There was also agreement on taking emergency action to lower Italy's and Spain's rising borrowing costs and create a single supervisory body for the banks in Eurozone by the end of this year. With EU leaders intent on not allowing major defaults or bankruptcies, focus will likely shift to inflation and government reforms. We remain optimistic on the reforms front with the PM (Prime Minister Manmohan Singh) now handling the Finance portfolio also. Reforms might also allow RBI (Reserve Bank of India) more flexibility in determining its fiscal policy.
Despite the underlying optimism, there are some who believe consolidation might
be on the cards and may keep gains in check. Overseas equities will lend
direction in early trade on Monday. Dow futures were trading nearly 140 points
higher, indicating US
indices are likely to open up yesterday, on the back of the deal inked by the
EU leaders. Back home, action may remain stock-specific. Auto and
cement companies' shares are set to take cues from their July sales figures,
which will start trickling in early next week.
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