Markets to get a flat-to-positive start; IIP data eyed

The Indian markets extended their rout in last session ignoring some positive comments by international agencies and bucking global trend. Today, the start is likely to be flat-to-positive and traders will first react to the numbers of Tata Consultancy Services (TCS), whose net profit declined by 3.3% sequentially to Rs 5,709 crore in the April-June quarter. The company’s revenue guidance missed estimates for the fourth straight quarter. The whole IT pack is likely to remain under pressure with TCS’ muted earnings. However, markets are likely to stabilize and move higher in latter part of trade, with an IMF report that India will be the world’s fastest growing economy for the second consecutive year in 2016 at 7.5 percent. IMF has retained India’s growth projection for current year at 7.5 percent which will be higher than China’s 6.8 percent. Traders will also be getting some encouragement with Finance Ministry statement that the negotiations on the double taxation avoidance agreement (DTAA) between India and Mauritius are in advanced stage and the pact would be revised soon. Marketmen will also be eyeing the Industrial production data slated to be announced later in the day. The auto stocks are likely to remain under pressure with Society of Indian Automobile Manufacturers (Siam) reporting that car sales in June grew 1.53% from a year ago, the slowest in eight months.

The US markets made some recovery in last session, although the major averages came well off their highs of the day, after moving sharply higher at the open on optimism about a deal between Greece and its creditors after the debt-laden nation promised to implement pension and tax reforms. The Asian markets have made an all positive start, with the Chinese market rebounding a second day, after the government banned insiders from selling stocks.

Back home, Indian equity benchmarks ended the choppy day of trade in red with a cut of around half a percent on Thursday, as investors remained on sidelines ahead of the corporate results season, which will be starting from today. The first quarter corporate results season will kick off today with Tata Consultancy Services (TCS) announcing its Q1 results. Traders also eyed macro economic data i.e. consumer price inflation (CPI) and index of industrial production (IIP) to be released tomorrow. Earlier, markets traded in narrow range with Sensex and Nifty swinging between negative and positive territory but, sudden fall in last leg of trade dragged frontline gauges below their crucial 28,600 (Sensex) and 8,350 (Nifty) levels as investors failed to draw any sense of relief with Union Minister of State for Commerce and Industry Nirmala Sitharaman’s statement that the government was closely monitoring the Greek crisis and prepared to face any situation in view of its 'comfortable' foreign exchange reserves. Traders also overlooked the reports of global agencies Standard & Poor’s and OECD who said that India’s confidence level continues to grow and the country is seeing “stable growth momentum. Marketmen also shrugged off firm global cues with European counters trading in green in early deals, while Asian markets ending mostly in positive terrain. Back home, sentiments remained dampened on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 354.32 crore yesterday, as per provisional data by the stock exchanges. Shares of information technology (IT) companies remained under pressure ahead of TCS’ April-June quarter results. Additionally public sector oil marketing companies (OMCs) suffered some profit taking after the crude oil prices bounced on strong economic data from Japan and Germany, and as Chinese stocks picked up after the government launched new steps to halt a rout in its share markets. Finally, the BSE Sensex declined by 114.06 points or 0.41% to 27573.66, while the CNX Nifty lost 34.50 points or 0.41% to 8328.55.