Markets to make a cautious start; IIP and CPI data eyed

The Indian markets remained in consolidation mood and ended with modest losses in last session. Today, the start is likely to be cautious and the trade may remain rangebound as traders will be eyeing the important macro data of IIP for the month of July and CPI inflation data for the month of August scheduled to be released in the evening. IIP for July has likely fallen to 1.7 percent month on month primarily due to weak core sector data, while the CPI for august is likely to soften to 7.7 percent. There will be some cautiousness with RBI Governor Raghuram Rajan’s statement that abrupt reversal of low interest rates globally could create substantial amounts of damage and that it should be done in predictable and careful way. There will be buzz in the infra stocks, as the ministry of urban development has prepared a draft concept note on the smart city scheme. Various states will have to submit proposals based on the reference framework to the central government. There will be some jubilation in the auto stocks on report that the government is looking at the proposal for extending excise duty concessions to the automobile sector beyond December. It is also reported that the Heavy Industry Ministry is likely to send a proposal to Finance Ministry regarding extension of excise duty concession till March 31, 2015. On the other hand there will be some somberness in the PSU oil marketing companies on sharp rebound in the international crude oil prices.

The US markets made a mixed closing in last session after an unexpected increase in initial jobless claims, though there was some recovery in the late trade but the market mood remained lackluster. The Asian markets after making a good start are trading mixed in early deals after report that China’s aggregate financing and money-supply growth missed estimates.

Back home, Indian equity benchmarks ended slightly in the red on Thursday with frontline gauges tumbling below their crucial 27,000 (Sensex) and 8,100 (Nifty) levels. Trade remained choppy with investors staying on sidelines ahead of the Index of Industrial Production (IIP) and Consumer Price Index (CPI) numbers which are due to be released tomorrow. The street widely expects Industrial production to grow 1.8% from a year earlier in July, slower than June’s 3.4% increase, while India’s consumer price inflation, closely tracked by the Reserve Bank of India, is expected to come down to 7.80% in August from July’s 7.96%. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 9.91 crore on September 10, 2014. However, losses remained capped as some support came after the United Nations Conference on Trade and Development (UNCTAD) said in its latest report that the Indian economy will grow at a rate of 5.6 percent in 2014. Also, Rating agency Moody’s, in its report titled ‘India outlook: Prospects brighten’, underscored the downside risks to the economy have receded, while those of prospects brightened and pegged growth rate to accelerate to 5.2% in 2014 and further to 6.5% by end of 2015. On the global front, European markets traded mostly in the red in early deals, while Asian markets ended mostly in the red. Back home, selling in pharma stocks mainly played spoilsport for the Indian equity markets, led by over four percent fall in Sun Pharma on reports that the company’s manufacturing facility in Halol (Gujarat) is undergoing a surprise inspection by the US Food and Drug Administration (US FDA). Besides, shares of disinvestment candidates viz. Oil and Natural Gas Corporation (ONGC), Coal India and NHPC also succumbed to selling pressure after the Union Cabinet on Wednesday cleared a dilution of the government’s stake in these companies. Finally, the BSE Sensex declined by 61.54 points or 0.23%, to 26995.87, while the CNX Nifty lost 8.40 points or 0.10% to 8,085.70.