Markets to extend gains with a positive start on supportive global cues

The Indian markets continued their bullish trend and ended with good gains in last session. Today, the start is likely to be in green with Nifty reclaiming 8750 levels in very early trade. However, traders will be reacting to the two important macro data announced after market hours yesterday. Retail inflation though inched up in January but hovered within the central bank’s comfort levels. CPI inflation with changed base year came at 5.1% in January, compared to previous month’s 4.3%. On the other hand, the Index of Industrial Production (IIP) growth was subdued at 1.7% year on year (yoy) in December compared with 3.9% in November on slow growth in mining and electricity segments. There will be some cheer in the market with the government stating that it has collected Rs 4.27 lakh crore, or 68.6 percent of budget target for indirect tax, in the April-January period of this fiscal. The budget target for indirect tax collections is Rs 6.23 lakh crore. The metals and mining stocks along with power are likely to keep buzzing with the announcement that out of the 176 applications received for the coal auction, 134 were found to be technically valid. There will be some somberness in the upstream oil companies, as the government has asked oil producers to provide $1.8 billion in subsidies to cover some of the losses of the oil marketing companies.

The US markets made a positive close in last session lifting the Nasdaq to its best closing level in almost fifteen years, on Ukraine ceasefire after a marathon peace talks involving the leaders of Russia, Ukraine, Germany and France. The Asian markets have mostly made a positive start on news of a ceasefire accord in Ukraine, though the Japanese market opened lower, with export-oriented stocks getting dragged down by stronger yen.

Back home, Thursday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges garnered gains of around one percent. Hectic buying activity which took place during last leg of trade mainly drove the markets higher, with frontline gauges ending at intraday high levels, recapturing their crucial 28,800 (Sensex) and 8,700 (Nifty) bastions. Earlier, domestic bourses traded listless for most part of the day as investors remained wary ahead of the important macro data, Industrial production (IIP) data for December 2014 and data for inflation based on combined consumer price index (CPI) for January 2015, which are slated to be announced later in the day. While the IIP data may come flat, the CPI data for the month of January is likely to rise. Report that foreign portfolio investors (FPIs) sold shares worth a net Rs 371.27 crore on Wednesday, too weighed down sentiments.  However, sentiments took U-turn in last hour of trade as market-participants opted to take positions in beaten down but fundamentally strong stocks. Sentiments also turned up-beat after global credit rating agency Moody’s Investors Service said the lower oil prices are expected to alleviate India’s high inflation and spur economic growth. Some support also came with a private study of MasterCard consumer confidence index, which has said that India is the second most optimistic nation among the Asia Pacific Region after Myanmar, scoring 91.6 in the index which is calculated with zero as the most pessimistic and 100 as the most optimistic. Positive opening in European counters too supported the sentiments. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too participated strongly in the rally. Meanwhile, surge in Auto stocks too supported the sentiments after the Society of Indian Automobile Manufacturers (SIAM) said that it expects passenger vehicle sales to rise three to five per cent in 2014-15, up from its earlier projection of one-two per cent, on improved consumer sentiment over the past few months. Finally, the BSE Sensex surged by 271.13 points or 0.95% to 28805.10, while the CNX Nifty gained 84.15 points or 0.98% to 8711.55.