Indian markets to get a positive start on supportive Asian cues

The Indian markets after a decent start and despite a huge round of choppiness managed to eke out gains of around half a percent in last session. Though, the industrial production came much better than expectation but they dampened the optimism of a rate cut by the RBI in its upcoming policy review. Today, the start is likely to be on a positive note, however the volatility will persist in the crucial data laden week for the market, investors focus will now be on the RBI policy and the Union Budget to be announced later in the week. Auto companies are likely to remain in jubilant mood with sales rising by 13% in February to 2,11,402 units, the highest pace of growth since April 2011. There has been good FII buying seen in last couple of days that has helped the markets move higher, hence investors will be eyeing their moves too. Apart from this there will be lots of scrip specific actions to keep the markets buzzing. 

The US markets made a mixed closing on Monday, as the news that Greece was set to receive final approval of a new bailout package got outweighed with the evidence of cooling Chinese economy. China reported slower than expected export growth in the last month. Investors are watching for Federal Reserve’s announcement later this week on monetary policy. Most of the Asian markets, barring China have made a positive start, trading about a percent higher on optimism that euro-zone finance ministers will complete a second Greek bailout. Japanese market was trading higher before policy announcements by the Bank of Japan.

Back home, it turned out to be a positive start for Indian stocks markets for a data heavy week filled with lot of important events like announcement of monthly IIP and WPI numbers, RBI monetary policy review meet, Indian Economic Survey, Rail budget and the Federal budget. The markets got off to a gap-up opening in morning trades and remained in fine fettle until the surprisingly encouraging IIP numbers which rose at the fastest pace in seven months in January. The unexpectedly strong expansion in India’s industrial production may have stunned one and all but not the domestic stock markets which plunged into the negative territory and touched the lowest point in the day immediately after the data came to the fore, as the resilience in factory output dimmed the prospects of monetary easing by Indian central bank. The market participants exerted hefty selling pressure on the markets and dragged the frontline indices even below the previous closing levels but the key gauges found some support around the psychological levels and showed signs of recovery since early noon trades. Market participants still showed conviction and piled up positions in rate sensitive counters like Banking, Automobile and Realty as they reacted to RBI’s earlier than expected cash reserve ratio cut by 75 basis points late on Friday. The Capital Goods counter witnessed hefty buying and topped the BSE sectoral chart with over 2.5% gains after showing an improved performance in January. Meanwhile, sentiments got support from India’s President Pratibha Patil’s comments on Indian economy which she said will slow down to 7% this fiscal from 8.4% last fiscal but soon revert to the 8-9% growth trajectory on the back of strong fundamentals and favorable domestic factors. Automobile sector shares climbed close to a percent after industry body - SIAM data showed car sales in India rose an annual 13.1 percent in February, with automakers posting a fourth straight monthly increase as they continue to recover from record falls in late 2011. Sales of trucks and buses, a key indicator of economic activity, rose 18.7 percent in February from a year previous to 76,891 vehicles. Besides, selling was largely evident in Information technology pocket which plunged around a percent while the defensive Healthcare counter too ended with marginal losses. Finally, the BSE Sensex gained 84.43 points or 0.48% to settle at 17,587.67, while the S&P CNX Nifty rose by 26.00 points or 0.49% to close at 5,359.55.