Indian markets to get a cautious but positive start

The Indian markets after a volatile day of trade ended up by about half a percent in last session despite looming Greek concern, today the start is likely to be cautious but in green and traders will be getting some support with the revival of core sector growth in the month of May, which rose an annual 4.4% compared to a contraction of 0.4% in April, clocking fastest pace in six months, led by a turnaround in electricity, oil refining, steel and cement sectors. Also, the Centre’s fiscal deficit for April-May this year stands at Rs 2.08 lakh crore, or 37.5 per cent of the 2015-16 Budget estimate of Rs 5.56 lakh crore, compared with 45.3 per cent in the corresponding period last year. However, there will be cautiousness with global credit rating agency Moody’s statement that there are growing concerns about risk of policy stagnation and “some disappointment” has emerged over the pace of reforms under the Modi government. Meanwhile, Indian corporate leaders have urged Prime Minister Narendra Modi to take steps to further reduce the cost of capital to help boost manufacturing in the country and generate consumer demand. There will be some buzz in the PSU oil marketing companies, as the price of petrol was cut by Rs. 0.31 a litre, while that of diesel was cut by Rs. 0.71 a litre on the back of declining international oil prices. The auto sector will be in action once the monthly sales numbers start trickling in.

The US markets ended modestly in green in last session on bargain hunting following last session’s sell-off, however concerns about Greece helped to limit the upside for the markets and traders largely shrugged off the latest batch of economic data, including reports on home prices, consumer confidence. Meanwhile, Greece became the first advanced economy to miss a payment on IMF debt. The Asian markets have made mostly a positive start, though the Shanghai Composite Index fluctuated as China factory-activity reports signaled a slowdown.

Back home, Indian equity benchmarks staged a smart recovery in last leg of trade on Tuesday and ended the session in green with a gain of around half a percent, supported by short-covering in beaten down but fundamentally strong stocks. Immense volatility characterized trading whereby benchmark equity indices kept altering between green and red terrain throughout the session as investors remain wary ahead of the Greece’s bailout expiry due today, when the cash-strapped nation is unlikely to make a 1.6 billion euro ($1.8 billion) repayment to the International Monetary Fund (IMF). Nevertheless, broader indices outperformed benchmarks, ending with a gain of over a percent. In the extremely choppy session of trade, buying which took place in last hour of trade mainly helped benchmarks to regain their positive trajectory as some support came with report that US embassy stated that India is one of the fastest growing FDI sources for the United States with investors from the country more interested in US' aerospace and textile sectors, among others. Some support also came with NITI Aayog Vice Chairman, Arvind Panagariya’s statement that India’s growth rate is expected to accelerate to 8 per cent in the current financial year and the economy will surpass $3 trillion mark in less than five years. Pangariya also said that India is well prepared to handle any situation that may arise out of the Greece crisis, citing strong fundamentals of the economy.On the global front, European counters continued trading in red, while the Asian markets ended in green. Back home, appreciation in Indian rupee too supported the sentiments. FMCG space too ended higher led by over four percent rise in Nestle India after Bombay high court permitted the company to export all nine variants of Maggi even as the ban on selling the two-minute noodles within the country will continue. Finally, the BSE Sensex ended up by 135.68 points or 0.49% to 27780.83, while the CNX Nifty gained 50.10 points or 0.60% to 8368.50.