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

The Indian markets extended their rally mood in last session, adding another over one and half a percent, with Sensex and Nifty reclaiming 27500 and 8300 levels respectively. Today, the start is likely to be flat-to-positive, though traders will be cautious ahead of the IIP and CPI data, slated to be announced after the market hours. There will be some respite for the foreign investors, as the income-tax department has asked its officials not to press foreign portfolio investors (FPIs) for payments until a committee set up by the government to deliberate on the contentious levy came up with its findings. Fresh notices will only be issued in those cases that could become time-barred. Also, the global rating agency Moody’s has said that credit conditions are likely to improve for rated Indian corporates over the next 12-18 months on the back of upturn in economic activities, government's reform push and transmission of monetary easing. There will be some buzz in the banking sector stocks, as the Reserve Bank of India has asked all public sector banks, some private sector and foreign banks to appoint an internal ombudsman. The initiative has been taken to further boost the quality of customer service and to ensure that there is undivided attention to resolution of customer complaints in banks.

The US markets ended modestly lower in the last session following Friday’s big gains. There was some profit booking while sharp jump in treasury yields too weighed on the sentiments. The Asian markets have made a mixed start as investors remained concerned about the developments in Greece’s bailout talks. However, the Chinese markets have extended their gains after 3 percent rally yesterday.

Back home, boisterous benchmarks showcased an enthusiastic performance on Monday, by rallying one and a half percentage point amid strong global cues. Sentiments remained up-beat since start as key bourses opened with huge gap on up-side and there appeared not even an iota of profit booking in the session as the benchmarks managed to fervently gain from strength to strength as investors continued hunt for fundamentally strong stocks. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 8,300 (Nifty) and 28,500 (Sensex) bastions as investors took to hefty across the board buying. A rate cut by China and uplifting US jobs data kept the momentum going for the markets. The government’s decision to ease its combative stance on MAT demand along, accompanied by a decline in global crude oil prices, hopes of a rate cut by Reserve Bank of India and the likelihood of a normal monsoon further boosted investor sentiment. Some support also came with Finance Minister Arun Jaitley’s statement that India’s economy grew an estimated 7-7.5 percent last fiscal year and will keep growing this year, but the government will have to invest more in agriculture to keep up the momentum. On the global front, European counters traded mostly in the red in early deals, though Asian markets ended mostly in the green terrain. 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. On the macro-economic front, data on inflation based on consumer price index (CPI) for April will be unveiled on Tuesday. On the same day, industrial production (IIP) data for March will also be released. Moreover, wholesale price index (WPI) data for April will be announced on Thursday. Meanwhile, rally in shares of Metal and mining space too supported the sentiments after China cut interest rates for the third time in six months on Sunday, 10 May 2015 to stimulate growth. Finally, the BSE Sensex surged by 401.91 points or 1.48% to 27507.30, while the CNX Nifty soared by 133.75 points or 1.63% to 8,325.25.