Gap-up opening expected as world stocks shine

Markets are likely to extend yesterday’s gain today on the back of firm global cues. The early indicator SGX Nifty has surged by 106 points at 7,342 levels.

On Tuesday, benchmark indices surged ahead with Nifty50 reclaiming 7,200 mark as clamours for an out-of-turn rate-cut in repo rate by the Reserve Bank of India (RBI) grew louder. The sharp rally in index heavyweight ITC was the major contributor to the gains.

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RBI may make a surprise rate cut this week on government's commitment to meet the fiscal deficit targets.

Among overseas markets, Asian shares look set to test February highs on Wednesday as signs of recovery in the US manufacturing sector and gains in oil prices eased worries about a global slowdown and pushed US stocks sharply higher.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6% in early trade, coming within striking distance of last month's peak touched on Feb. 23, its highest since early January.

US stocks rallied to a seven-week high after manufacturing in the world's largest economy showed signs of stabilising. Optimism that central banks from Asia to Europe will add to stimulus boosted emerging-market currencies and commodities, while Treasuries fell with gold.

STOCKS TO WATCH

Rate-sensitive sectors are likely to be in focus as RBI may make a surprise rate cut this week.

FMCG stocks will remain in the limelight as the rural and agriculture push is likely to drive sales of companies.

The government has budgeted Rs 55,000 crore for telecom spectrum auction in 2016-17, while the total revenue from communication services has been pegged at Rs 98,995 crore. Shares of telecom companies will be in focus.

IDBI Bank has unveiled three year plan to double business to Rs 10 lakh crore by March 2019.

Japan-based Sumitomo Mitsui Banking Corporation on Tuesday sold 1.8% stake in Kotak Mahindra Bank for Rs 3,433 crore, block deal data showed.

With the government proposing to hike the customs duty on primary aluminium products, domestic majors like Aditya Birla Group company Hindalco Industries, state-owned National Aluminium Company (Nalco) and Anil Agarwal-led Vedanta are planning to raise product prices in coming months.

Drug major Cipla has transferred its consumer healthcare business to its arm Cipla Health.

Helped by a near 10% rally on Tuesday, ITC has surpassed Infosys and HDFC Bank to emerge as the third most valuable company in terms of market valuation.