Markets to get a mildly positive start on optimistic global cues

The Indian markets went through a big disappointment in the last session when the benchmarks after making a good move surged intraday, recovering from early lows but could not sustain the momentum and ended marginally in red on profit taking. Today the start is likely to be in green and markets will be getting some advantage of the positive trade in Asian counterparts. Traders will be getting some support with an UN report, saying that Indian economic growth is projected to surpass that of China, with the GDP expected to zoom by 7.7% in 2016, while China is projected to grow by 7 per cent in 2015 and 6.8 per cent next year. Also, due to falling prices of some food items, retail inflation based on consumer price index (CPI) for rural labourers eased to 5.49% in March from 6.19% in the previous month. The rate of price-rise based on CPI for agricultural labourers too softened to 5.24% in March from 6.08% in February. However, there will be some cautiousness in the rate sensitive sectors, as the RBI Governor Raghuram Rajan has said that lower interest rates and tax incentives can boost investments, but it is consumer demand that holds the key for pushing economic growth.

The US markets made a mixed closing after a choppy trade, though the Dow still managed to reach another new record closing high. On economy front there was report showing a substantial increase in housing starts in the month of April. The Asian markets have made a mixed start, though some of the indices are showing strength led by the Japanese market which surged over half a percent after Japan’s economy expanded for a second straight quarter at an annualized rate of 2.4 percent in the first quarter, while the yen weakened against the dollar.

Back home, Indian equity benchmarks ended the volatile day of trade slightly in the red on Tuesday with Sensex and Nifty declining below their crucial 27,700 and 8,400 levels respectively as investors opted to offload their positions in risky assets after two days of continuous rally. After a weak opening, markets gained momentum and entered into positive terrain as sentiments turned up-beat on forecast of timely monsoon coupled with the government containing the fiscal deficit at 4.00% of the GDP for 2014-15. Further, rate cut hopes by RBI at its upcoming monetary policy review on June 2 too aided the sentiment. But once again markets succumbed to selling pressure as investors opted to book profit at higher levels and ended the otherwise upbeat session of trade in negative terrain. However, losses remained capped with SBI’s Monthly Composite Index, a leading indicator for manufacturing activity in Indian Economy, up from 46.8 in April 2015 to 53.8 in May 2015. Meanwhile, Finance Ministry is expecting a rating upgrade by credit agencies by the year-end on the back of policy initiatives, moderating inflation and improvement in the fiscal position of the government. On the global front, European markets traded in green in early deals, while Asian markets ended the Tuesday’s trade mostly in the green. Back home, sentiments remained dampened on reports that foreign portfolio investors sold shares worth a net Rs 202.12 crore on May 18, 2015, as per provisional data released by the stock exchanges. Selling in banking counter dampened the sentiments after Indian ratings warned that bad loans of Indian banks were seen rising to their highest levels in nearly 14 years. The rating agency further said that it estimates total impaired loans at 13% (of overall loan book) for FY16. 4.9% of this would be gross non-performing loans and the rest would be restructured loans, etc. Finally, the BSE Sensex declined by 41.77 points or 0.15% to 27645.53, while the CNX Nifty lost 8.00 points or 0.10% to 8,365.65.