Markets to get a strong start on jubilant global cues

The Indian markets after a volatile trade and recovering from the day’s low, snapped the last session modestly in green. Today, the start of the new week is likely to be in good on jubilant global cues. Traders will be getting some support with Prime Minister Narendra Modi’s statement that India is the fastest developing country among the “larger economies of the world”. He further said that India is the only economy which has not been affected by the global economic crisis that has hit the world.  Though, traders may react cautiously to the two major macro data of IIP and CPI inflation announced after the market hours on Friday. While, the Industrial output or index of industrial production (IIP) contracted an annual 1.3 percent in December, CPI inflation hit 17-month high in January at 5.69%. Traders will now be eyeing the WPI inflation data slated to be announced later in the day.Meanwhile, the capital goods stocks are likely to see some action on report that the country's first-ever policy for the capital goods sector will be placed before the Cabinet for approval this month. Auto sector stocka are likely to come under pressure on report that passenger car shipments from India declined 18.85 per cent to 33,909 units in January due to challenges in top export markets like Algeria, Europe and neighbouring countries. There will be lots of result reactions too, with PSU banking stocks reacting to the BoB numbers announced during the weekend.

The US markets ended higher in last session, encouraged by the recovery in the crude prices, while there was good retail sales report too that supported the markets snap their losing streak. Most of the Asian markets have made a strong start led by the Japanese market, which is higher by over five percent in the early deals as the yen dropped against dollar amid speculation that bear run was excessive. The Chinese market though was in red coming after a long holiday and despite the central bank stepping up efforts to restore stability to the nation’s currency and economy.

Back home, a session after a distressing performance, Indian equity benchmarks consolidated on Friday and ended the volatile day of trade with modest gains. Sentiments got some support with RBI Governor Raghuram Rajan’s statement that the ongoing clean-up of bank balance sheets will help spur economic growth and improve the lenders’ profitability. He has also said that while the profitability of some banks may be impaired in the short-run, the system, once cleaned, will be able to support economic growth in a sustainable and profitable way. Also, the RBI assured banks that it would inject adequate cash in view of the tight liquidity conditions in the market. Some support also came with Union Minister Venkaiah Naidu expressing confidence that bills pertaining to formation of a realty regulator and the much-awaited indirect taxation reform GST will be passed in the upcoming Budget session, and hoped that Congress will cooperate in ensuring the functioning of Parliament. However, heavy selling by the foreign investors, absence of any fresh positive trigger and below expected third quarter results, halted markets upward movement. In addition, decline in the rupee coupled with a slide in the crude oil prices also kept market-participants on the tenterhooks. Indian rupee weakened by 7 paise to quote at an over 29-month low of 68.37 against the dollar on sustained demand for the American currency from importers and banks. Meanwhile, some investors opted to remain on sidelines ahead of Consumer Price Index (CPI) and Index of Industrial Production (IIP) data scheduled to be released later in the day. On the global front, Asia markets dropped sharply, while European stocks rose Friday. Back home, the local markets got a positive start and moved higher, showing a good pullback after massive sell-off in last session. However, the indices failed to capitalize on the initial momentum and continued to see-saw around the neutral line for most part of morning trades. The selling pressure accentuated in the mid afternoon trades as investors took to across the board risk aversion. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with small gains. Finally, the BSE Sensex gained 34.29 points or 0.15% to 22986.12, while the CNX Nifty rose 4.60 points or 0.07% to 6,980.95.