Markets to make a positive start ahead of CPI and IIP data

The Indian markets after bouncing back and forth in last session managed a modestly green close. Today, the start is likely to be in green though traders will be eyeing the major macro data of inflation and industrial production to be announced later in the day. IIP data is likely to expand marginally to 0.8 per cent in September, while the CPI inflation should ease to 5.8 per cent in the month of October as compared to 6.3 per cent reported in the month of August. Traders will remain worried with differences between Centre and states over some key provisions of the Goods and Services Tax, as an Empowered Committee has insisted that threshold turnover for levying GST be retained at Rs 10 lakh and petroleum be kept out of the purview of the new tax regime.  There will be some buzz in the coal and mining stocks, as an inter-ministerial panel has decided the methodology for fixing the reserve price for coal auction and will seek the Cabinet approval for the same. There will be some buzz in the PSU oil marketing companies on report that the state oil firms plan to cut petrol and diesel prices again.

The US markets ended flat with a positive bias in last session, though the trade remained choppy and bourses lacked direction throughout much of the trading day. Markets also overlooked National Federation of Independent Business data showing that its small business optimism index crept back up to 96.1 in October. The Asian markets have made mostly a positive start led by the Japanese market which climbed after the yen depreciated to a seven-year low amid speculation the nation will delay raising its sales tax again.

Back home, Indian equity benchmarks ended the volatile day of trade slightly in the green on Tuesday on supportive global cues. Local equity markets, which started on optimistic note failed to sustain the early euphoria and slipped into negative territory in afternoon deals. While, the mood remained downbeat for most of the afternoon, recovery, which emerged in the last hour of trade, mainly acted as saving grace for markets. Overall, the domestic sentiment remained upbeat as foreign funds and retail investors engaged in enlarging positions on expectations of acceleration in economic reforms by the government after the expansion of the Union Cabinet. Some support also came in from international ratings agency Moody’s quarterly Global Macro Outlook report that it expects India to witness ‘sustained robust growth’ over the next two years. However, gains remained capped as prevailing caution ahead of October Consumer Price Index (CPI) data to be released today. Meanwhile, as per some reports the consumer inflation rate for the month of October is expected cool down to 5.8% from 6.4% in the previous month due to a sharp fall in food and oil prices. The fall in Brent Crude prices to a four-year low of $81.23, which is likely to help lower the fiscal deficit, also boosted sentiments. Global cues too remained supportive with European markets making a positive start, although the Asian markets ended mixed. Back home, sentiments got some support from report that foreign portfolio investors (FPIs) bought shares worth a net Rs 355.30 crore on November 10, 2014, provisional data released by the stock exchanges showed. Meanwhile, rally in stocks related to infra segment aided the sentiments. Scrips like Hindustan Construction Company (HCC), PBA Infrastructure, Madhucon Projects, IRB Infrastructure Developers edged higher after the Ministry of Road Transport & Highways and the Ministry of Railways signed a Memorandum of Understanding (MoU) on policy related to constructions of Road Over/Under Bridges (ROBs/RUBs) on National Highway corridors. Finally, the BSE Sensex gained 35.33 points or 0.13%, to 27910.06, while the CNX Nifty added 18.40 points or 0.22% to 8,362.65.