Indian markets that have shown some signs of recovery in last session, went for a rally on Wednesday and the benchmarks after a gap-up start show remarkable performance, there was no sign of relenting throughout the session and bulls remained in command. It was broad based buying on positive global cues that led the major bourses reclaim some of their crucial psychological levels. The upbeat global environment gave traders a reason to cover their short positions just a day ahead of the May F&O series expiry. There were many factors that propelled the markets higher, one being the global brokerage houses upgrading Indian equities to "overweight" from "equal weight", in a boost for investors they stated that India is becoming a low-beta market within the emerging markets basket. India's relative valuations as compared to emerging markets have come off. They also pointed that monsoon rainfall and passage of goods and services tax (GST) are the key triggers for the Indian markets. The other major factor to the day's gains was private weather forecaster Skymet's prediction of 'above normal' monsoon on the back of a warning announced by the Bureau of Meteorology (BoM), Australia. Skymet sees monsoon at 109 per cent of the long period average (LPA) of 887 mm for the four months from June to September, versus the initial estimate of 105 per cent. August rainfall is seen at 113 per cent and September at 123 per cent. Odds of a La Nina increase, boosting planting of rice, corn and oilseed crops. Australian Met Department's report that the weather system that wreaked havoc in India, Asia and Africa has just ended and will now give way to bountiful rain in the form of La Nina. On the global front, after the rally in US markets the Asian markets followed the trend, while the European markets too made a strong start. Back home, the boisterous rally of the domestic market was in line with global markets and both the Sensex and Nifty ended at their highest closing levels in last one month. Markets after a strong start witnessed pick-up in buying activity in recently beaten down stocks. While there was surge in companies with big rural sales after the good monsoon prediction, the banking stocks remained the most jubilant ones from the beginning. Finally, the BSE Sensex surged by 575.70 points or 2.28% to 25881.17, while the CNX Nifty rallied by 186.05 points or 2.40% to 7934.90.

The US markets closed higher on Wednesday, for a second straight session, with the S&P 500 posting its highest close in nearly a month on the back of a rally in energy and materials shares. A combination of stronger crude prices and mounting expectations that the Federal Reserve will raise interest rates this summer helped buoy sentiment. Investors shrugged off a report that showed the nation's trade deficit widened in April, as imports increased faster than exports. The trade gap in goods - services are excluded - rose to $57.5 billion last month from a final reading of $57.1 billion. The Commerce Department originally reported a $55.6 billion goods gap in March. The rise in the goods deficit was lower than Wall Street expected, a sign that trade isn't becoming an even bigger albatross for the economy. Still, a higher deficit subtracts from gross domestic product - the most complete measure of an economy's overall health. The Dow Jones Industrial Average added 145.46 points or 0.82 percent to 17,851.51, Nasdaq was up by 33.83 points or 0.70 percent to 4,894.89, while S&P 500 gained 14.48 points or 0.70 percent to 2,090.54.

Crude oil futures bounced back and came very close to $50 a barrel on Wednesday, a level last reached in mid-October. Traders got encouragement with official data confirming a significant draw down in US oil inventories. The US Energy Information Administration reported that US crude supplies fell 4.2 million barrels for the week ended May 20. Benchmark crude oil futures for July delivery inched up by $0.93 or 1.91 percent to $49.55 a barrel after trading in a range of $48.67 and $49.58 a barrel on the New York Mercantile Exchange. In London, Brent crude for July delivery closed at $48.62, up $0.27 or 0.56 percent on the ICE.

Indian rupee snapping its nine days losing streak surged on Wednesday, on fresh selling of the American currency by exporters and banks amid strong equities. The global setup remained conducive from the very beginning and after the positive trade in other global equity markets the local equity markets too showed a strong performance, boosting the domestic currency to post maximum one day gains since 17 March. The other regional currencies too strengthened against the US dollar despite the robust release of new home sales data. On the global front, the US dollar held steady at two-month highs against the other major currencies on hopes of June rate hike in the US after new home sales soared to the highest level since the start of 2008 in April. Finally, the rupee ended at 67.33, 43 paise stronger from its previous close at 67.76 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity and debt segments both. In equity, the gross buying was of Rs 3571.12 crore against gross selling of Rs 4372.57 crore, while in the debt segment, the gross purchase was of Rs 703.30 crore with gross sales of Rs 1619.68 crore.            

The US markets extended the rally in last session with the Nasdaq and the S&P 500 reaching their best closing levels in about a month. Apart from the rise in crude oil prices news of “major breakthrough” in talks between Eurozone finance ministers and Greece to unlock 10.3 billion euros in new bailout loans lifted the markets higher. The Asian markets have made a mixed start and some of the indices are giving up modestly of their last session gains, though some have strengthened further as the crude traded above $50 a barrel for the first time since November. The Indian markets rallied in the last session and the major averages were able to reclaim some of their crucial psychological levels on broad based buying and short covering. Today, the start of the F&O series expiry day is likely to be cautious and volatility can be seen through the day, as the traders will be settling and rolling over positions to the next series. Traders will also be concerned with a private report of confidence among Indian businesses falling to a five month low in May. The Deutsche Boerses MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, fell from 62.4 in April to 61.8 in May, lowest since December 2015. Also, the Securities and Exchange Board of India (Sebi) announced to put in place stringent norms for high-frequency trades along with higher penalties for misuse, initiate strong action against auditors for lapses and expressed hope that P-Note users will start directly investing in the Indian market. However, there will be some action in the capital goods sector stocks, as the Cabinet approved the first-ever policy for the capital goods sector in the country that aims to triple the value of production of these goods to Rs.7.5 lakh crore by 2025 and create more than 21 million jobs. Some buzz can be seen in the sugar stocks too, on report that the government is likely to put on hold the move to cut down or totally remove the 40 per cent excise duty on sugar import. There will be lots of result announcements too to keep the markets in action.

Support and Resistance: NSE Nifty and BSE Sensex

Nifty Top volumes

• Dr. Reddy's Laboratories has entered into the branded consumer health arena through the acquisition of six OTC brands from Ducere Pharma.
• Tata Power, India's largest integrated power company has been awarded with the prestigious OHSAS 18001:2007 certification.
• Wipro has launched Total Customer Centricity, a Master Data Management Solution for the Manufacturing Sector.
• Bharat Heavy Electricals has successfully commissioned the first 800 MW Supercritical thermal unit in Karnataka.
• Tech Mahindra has registered a growth of 93.37% in its net profit after special adjustments at Rs 829.54 crore for the quarter ended March 31, 2016.