Markets to make a cautious start, likely to get some support with good macro data

The Indian markets overlooking the sluggish global cues made a smart come back and ended higher in last session, on hopes of improvement in economic conditions and renewed fund buying. Today, the start is likely to be cautious as the global markets are not in good shape, though on the domestic front there are lots of supportive cues, growth of industrial production (IIP) rebounded to 13-month high of 3.4 percent in April  after contracting for two consecutive months. On the same time, subdued prices of vegetables, cereals and dairy products pulled down the Consumer Price Index (CPI) to three-month low of 8.28 percent in May. Industry bodies have expressed their hopes that IIP returning to positive will lead to industrial recovery which is critical to lift the economy. Traders are also likely to get some support from meteorologists statement that it is too early to be worried about a below normal monsoon because monsoon showers could pick up in the coming weeks. There will be some buzz in the apparel manufacturing stocks on report that apparel exports from India jumped by 24.96 percent to $1.49 billion in May, helped by strong demands in non-traditional markets. There will be some action in chemical sector too, as the Centre is expected to come out with a new national chemicals policy soon.

The US markets extended their bearish trend and ended lower once again in last session on getting disappointing retail sales data amid escalating violence in Iraq. Meanwhile, traders mainly shrugged off a notable upward revision to April sales. The Asian markets have made a mixed start with the benchmark regional index heading for the first back-to-back loss in three weeks.

Back home, Indian equity benchmarks, resuming their northward journey after a day of pause, staged a decent performance on Thursday by rallying around half a percent, as investors opted to buy fundamentally strong but oversold stocks. Though, bouts of volatility were witnessed during the session with key benchmark indices slipping into the red couple of times, but indices managed to end comfortably above their previous closing levels. Overall, sentiments remained optimistic on report where IMF stated that increasing investment over the past few months is providing impetus to Indian economy and potential growth rate could go up over time. Indian economy is recovering to its potential growth rate at 6.75 to 7 percent. Moreover, hopes of good macro-economic data too aided to the sentiments. The industrial production (IIP) is expected to rise in April to around 2 per cent from 0.5 per cent recorded in the month of March, while for the consumer inflation the street is expecting a marginal ease in May from 8.59 per cent recorded in April. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 313.40 crore on June 11, 2014, as per provisional data from the stock exchanges. Sentiments were also weighed down after Indian Meteorological Department reported that monsoon rains were 48% below average levels in the week to June 11, reflecting the late onset of the annual rains over the southern Kerala coast. On the global front, European counters made a firm start, however, most of the Asian equity benchmarks ended the session in the red. Back home, buying in oil and gas counter aided sentiments with Reliance Industries and ONGC, gaining on continued hopes of policy reforms in the sector by the newly elected Narendra Modi government. Additionally, shares of public sector oil marketing companies (PSU OMCs) edged higher on reports that the oil ministry was preparing a fresh proposal for the Cabinet to deregulate diesel price to reduce the government’s fuel subsidy burden. Finally, the BSE Sensex was up by 102.32 points or 0.40% at 25576.21, while CNX Nifty settled at 7,649.90, up by 23.05 points or 0.30%.