Markets to get a cautious but positive start

The Indian markets losing their pace again, made a flat closing in last session; today the start of the crucial week is likely to be cautious but green. Traders will be eyeing the outcome of the US Federal Reserve's rate-setting meeting on Thursday, while on domestic front marketmen will be first reacting to the better than expected industrial production numbers which rose by 4.2 per cent in July against 0.9 per cent growth a year ago, on the back of good performance of manufacturing and capital goods sectors. However, all eyes will be on the inflation numbers, as the WPI will be revealed during mid day, while the CPI numbers will come after market hours. Further cooling of the inflation will add pressure on the Reserve Bank of India (RBI) to cut interest rates again. Minister of State for Finance Jayant Sinha too has said that RBI should take into account various factors, including low inflation, while deciding on monetary policy stance.  Markets will get some support with the report of Empowered Committee of State Finance Ministers meeting on Tuesday to finalise the model legislations that have to be approved by state legislatures for rollout of the Goods and Services Tax (GST). Export oriented stocks will see some action on report that the government is expected to extend the interest subsidy scheme for exporters for 3 years to help boost overseas shipments that have been in the negative zone since last December.

The US markets extended their gains in last session despite mixed set of economic data, eyeing crucial meeting of Federal Reserve policy makers. The Asian markets have made a mixed start and some of the indices are trading lower by about half a percent in early deals, concerned over Chinese industrial production and fixed asset investment data released over the weekend.

Back home, Friday turned out to be a disappointing session for the Indian equity indices which ended on quiet note despite gap-up opening as investors remained on sidelines ahead of industrial production (IIP) number for July to be released later in the day. Earlier, sentiments remained up-beat with the statement of the group headed by Reserve Bank of India Governor Raghuram Rajan, which is one of the subcommittees of the Financial Stability and Development Council (FSDC) that there was no immediate cause of worry for India from global economic developments and financial volatility, though it has urged to be vigilant. Some support also came after Foreign Investment Promotion Board (FIPB) will be taking 25 Foreign Direct Investment (FDI) proposals, in its 224th meeting which will be held on September 22; under the chairmanship of Secretary (Economic Affairs).The proposal includes those of Aditya Birla Nuvo, Cipla, Sun Pharma Advanced Research and HDFC Capital Advisors. But markets started paring profits as traders turned a bit cautious ahead of IIP to be announced later in the day. There was general expectation of a modest decline in the IIP numbers for July from its previous month figure of 3.8%, as the core sector data too had shown a dismal data earlier. Sentiments also remained dampened on report that June-September monsoon, which irrigates nearly half of the country's farmlands, has started withdrawing from the north-western region.  On the global front, European counters made a weak start, while Asian markets exhibited mixed trend. Back home, depreciation in Indian rupee too dampened the sentiments. However, some support came after NITI Aayog vice-chairman Arvind Panagariya made a strong pitch for 50-100 bps cut in the RBI’s key rates, seeking support for economic recovery. Finally, the BSE Sensex lost 11.96 points or 0.05% to 25610.21, while the CNX Nifty declined by 1.20 points or 0.02 % to 7789.30.