Markets to make a cautious start in reaction to Greece development

The Indian markets made a flat but positive close after a choppy trade in last session, awaiting key macro data. Today, the start is likely to remain cautious and traders, other than the local economic situation will be reacting to the development in Greece. On domestic front, in a big surprise Industrial output for the country surged to 4.1 percent in April, compared to a reading of 2.1 percent month-on-month and much higher than the street expectations. On the same time May consumer inflation came in line with expectations at 5.01 percent, and slightly higher than 4.87 percent in the month of April. There will be some buzz in the markets with India encouraging Singapore's small and medium enterprises for investment, has said that the time was right for a “quantum jump” in the bilateral economic relationship. Meanwhile, some buzz will be seen in the PSU banking stocks with Finance Minister Arun Jaitley promising more capital infusion into public sector banks, saying there’s “merit” in their demand for more funds over and above what was provided in the Budget. The Finance Ministry is likely to finalise additional capital requirement, over and above budget provision of about Rs 8,000 crore, for public sector banks in the next three months.

The US markets ended lower in last session on uncertainty about Greece with focus remaining on monetary policy next week, with the Federal Reserve reviewing interest rates Wednesday. The Asian markets have made a soft start reacting to news that talks between Greece and its creditors broke down without a deal on bailout aid.

Back home, Friday’s trading session turned out to be a choppy day of trade for Indian equity benchmarks where key indices managed to keep their head above water with Sensex recapturing its crucial 26,400 mark, while Nifty ended near its crucial 8,000 mark. Buying in last leg of trade mainly prevented a down day of trade at Dalal Street as markets for couple of times surrendered to selling pressure, though only to bounce back in green. Overall, investors remained on sidelines ahead of Consumer Price Index (CPI)-based inflation and index of industrial production (IIP) data, scheduled to be released later in the day. Street widely expects annual output growth at factories, mines and utilities in April to hit a six-month low of 1.6% compared with 2.1% the previous month, while Consumer inflation in May is anticipated to edge up to 5.0 percent from 4.87% the previous month on higher energy and food costs. Buying in banking space in last leg of trade mainly aided the sentiments after Finance Minister Arun Jaitley coming from his meeting with the heads of PSU banks said that he has discussed road map for reducing stress in balance sheets with regards to NPAs. Banks have put up a strong case for additional capital requirement. Some support came with Paris-based think tank OECD’s latest report that Indian economy saw the 'strongest growth' in the first quarter of 2015 among large economies, including China, the US, Germany and Canada. On the global front, European markets traded in red, while Asian equity benchmarks ended mostly in the green. Back home, foreign portfolio investors (FPIs) sold shares worth a net Rs 622.89 crore, while domestic institutional investors (DIIs) bought shares worth a net Rs 589.29 crore on June 11, 2015, as per provisional data released by the stock exchanges. Meanwhile, the software pack came into pressure on reports that the US government has opened an investigation against two of the biggest Indian outsourcing companies for possible violations of H1-B visa rules. Finally, the BSE Sensex gained 54.32 points or 0.21% 26425.30, while the CNX Nifty added 17.55 points or 0.22% to 7982.90.