Markets to make a flat-to-soft start reacting to CPI data

The Indian markets surged over a percent in last session, in jubilation over Greek deal. Traders suddenly went for buying binge on hopes of improvement in global sentiments. Today, the start is likely to be a bit cautious and markets can even dip marginally in red on mixed regional cues and negatively reacting to CPI inflation numbers for June, which surged to eight month high of 5.4 percent, mainly due to costlier food items and can limit the room for RBI to cut rates next month. Traders will also be eyeing the WPI inflation data to be released later in the day. However, traders will be getting some support with India Ratings retaining its 7.7 percent growth forecast for this year but calling for continuous government interventions to fill the deficits in physical and social infrastructure spaces for long-term higher growth. There will be some buzz in the market, as the market regulator Sebi, in order to insulate retail investors from excessive speculation through the derivatives route has specified that from late October all futures & options (F&O) contracts should have a minimum value of Rs 5 lakh and a maximum of Rs 10 lakh. The steel stocks are likely to be in action, as the global rating agency Moody's projected an increase in demand for steel in India on the back of strong economic growth and revival of infrastructure spending.

The US markets surged in last session, with the major averages closing higher for the third straight session on news Greece and its international creditors finally reached an agreement, now traders are eyeing Federal Reserve Chair Janet Yellen's semi-annual congressional testimony later in the week for further cues. The Asian markets have made mostly a positive start, with traders shifting their attention to the timeline for higher US interest rates, after the Greek deal. 

Back home, markets finally got the much needed relief rally on Monday, with benchmarks not only reclaiming their crucial psychological levels but ending near the highs of the day. The trade which had turned sluggish by the mid of the day on domestic economic growth concern, suddenly got a new life after Euro zone leaders clinched a deal with Greece. Developments in Greece have been dictating stock moves worldwide since April. Greek Prime Minister Alexis Tsipras achieved a settlement with his European creditors over the reforms needed to start formal negotiations over a third bailout program, after almost 17 hours of talks in Brussels and suggestion of temporary Grexit has been removed from final agreement, though Greek parliament will have to legislate on number of reforms. Sensex came very close to the crucial 28000 mark, while Nifty too posted nearly a triple digit rally, with across the board buying. Earlier, the markets made a good start taking cues from the regional peers, but the trade turned cautious and once dragged the markets into red on concern of disappointing IIP data, which grew 2.7 per cent in May, lower than the downwardly revised 3.36 per cent growth recorded in April. Also there was expectation of some uptick in the CPI inflation numbers slated to be announced later in the day. Also, the Markit survey stated that private sector business sentiment has fallen to its lowest level since October 2009 as firms expect a subdued order flow in the next 12 months and job creation is likely to be moderate. It also said that although Indian companies foresee further job creation in the coming 12 months, confidence level has dipped below the worldwide trend. On the global front, the major Asian markets ended in green after China’s benchmark surged for a third straight day, while European markets too made a jubilant start. Back home, the domestic markets also got some support with Finance Minister Arun Jaitley expressing his confidence on the country’s economic growth and stating that tax revenues are expected to be higher this year while improving macroeconomic fundamentals and ongoing reforms make 8-10 per cent growth “eminently achievable”. Finally, the BSE Sensex soared by 299.79 points or 1.08 % to 27961.19, while the CNX Nifty ended higher by 99.10 points or 1.19% to 8459.65.