Markets to consolidate with a flat start

The Indian markets bounced back and despite some late hour profit taking ended with gains of around half a percent in the last session, on the back of some upbeat economic data, though global developments kept weighing on the sentiments. Today, the start is likely to be flat-to-cautious on muted global trends and lacking any major trigger on the domestic front. There will be some support to the markets with report that the Commerce and Industry Ministry has initiated an extensive survey on ‘ease of doing business’ in states with an objective to improving the business climate of the country. Services oriented stocks though will continue to remain under pressure, on reports that services exports fell by 4.5 percent to $ 13.01 billion in April 2015 as compared $13.63 billion during April 2014. There will be some buzz in the PSU banks, as the finance ministry has asked state-run banks to prepare a list of non-core assets they hold and look at their timely disposal, which it expects will help raise as much as Rs 20,000 crore for the lenders to meet their capital requirements and support loan growth. Some action can be seen in the PSU oil marketing companies, as petrol price has been hiked by 64 paise a litre, but diesel price was cut by Rs 1.35 per litre in line with trend in global oil rates.

The US markets made a soft start of the new week and all the major averages ended down by over half a percent each, despite recovering from their intraday lows on some disappointing US economic data, including a report from the Federal Reserve showing an unexpected drop in industrial production in May. The Asian markets have made mostly a negative start, bracing for the possibility of Greece defaulting on its debt and extending their downtrend with all eyes on US FOMC two days meeting outcome.

Back home, Monday’s session turned out to be a good day of trade for the Indian equity markets, where frontline gauges garnered gains of around half a percent. Markets after a initial hiccups gained ground and traded in fine fettle to end above their crucial 26,550 (Sensex) and 8,000 (Nifty) bastions. Sentiment was buoyed as the wholesale price index (WPI) based inflation for May 2015 contracted 2.36%, the seventh straight month of decline, as compared to a contraction of 2.65% in the previous month with food articles inflation quoting at 3.8% against 5.73% last month. Sentiments also remained up-beat on expectations that above-average monsoon rain will improve the odds for further monetary policy easing from Reserve Bank of India (RBI). Moreover, traders rejoiced upbeat domestic economic data of strong Index of Industrial Production (IIP) and steady Consumer Price Index (CPI) numbers released on Friday after the market hours. IIP increased by 4.1% in April, against a growth of 2.8% a year ago and 2.5% in March this year on the back of 5.1% growth in manufacturing and 11.1% expansion in capital goods, while CPI rose from 4.87% in April to 5.01 in May on the back a poor monsoon. On the global front, European counters made a start in red terrain, while Asian markets ended in red amid concerns of a possible Greek default. Back home, some support came with report that the finance ministry has loosened the purse strings and asked ministries and departments to start spending with focus on capital expenditure as it looks to lift growth with private sector investment yet to get underway. The key areas are roads and shipping along with rural development and agriculture. Meanwhile, the FDI inflows into the services sector grew by over 46 per cent to $ 3.25 billion in 2014-15 as compared to $ 2.22 billion in 2013-14. Finally, the BSE Sensex surged by 161.25 points or 0.61% to 26586.55, while the CNX Nifty gained 31.00 points or 0.39% to 8013.90.