Markets to make a positive start of the truncated week

The Indian markets before going for a long weekend posted strong gains in last trading session, today the start of the truncated week is likely to be in green, traders will first be reacting to the mixed economic data announced after the market hours on Friday, while the Index of Industrial Production (IIP) improved to 2.1% in June as compared to 1.2% in May, the consumer price index (CPI) rose for fourth straight month to 6.07% in July as compared to 5.76% in June 2016. Marketmen will be getting some encouragement with Prime Minister Narendra Modi, vowing to keep inflation under control stating that he has tried to stay away from populism which the past regimes practiced to get recognition while 'emptying the exchequer'. Meanwhile, Finance Minister Arun Jaitley has called for reforms at municipal and panchayat levels to complement the efforts of the Centre and the states to improve ease of doing business. However, there will be some cautiousness too, as the after rising for the first time in 18 months in June, exports shrank again in July, contracting 6.84 percent due to decline in shipments of engineering goods and petroleum products. There will be some buzz in the oil marketing companies, as the price of petrol has been cut by Rs 1 a litre and diesel by Rs 2 per litre, the fourth reduction in rates since July. Power stocks too will be in action, as a report under government's ambitious Sagarmala project has said that Coastal movement of coal could cut power costs by 50 paisa per unit for power plants besides saving Rs 17,000 crore annually.

The US markets surged in last session with all the major averages reaching new record closing highs. Traders turned bullish amid indications that the US economy is outperforming after the National Association of Home Builders released a report showing an improvement in homebuilder confidence in the month of August. The Asian markets have made mixed start , though many of them are in green on record-high close for US equities and oil’s return to more than $45 a barrel.

Back home, Indian benchmarks carried forward their northbound journey for yet another session on Friday, optimistic cues from Asian market helped the indices to surpass crucial support levels of 8,650 and 28,150 and move in higher trajectories. A strong lead from Wall Street and a rebound in oil prices gave Asian stock markets a lift on Friday, even as fresh economic data from China missed expectations. On the domestic front, sentiments got some support from India Meteorological Department (IMD’s) reports that monsoon rains in India were 15 percent above average in the week ended August 10, 2016. The weather office has retained its forecast for an above-average monsoon this year, boosting hopes of a rise in farm output and income after two years of drought. Investors got some comfort with the report that India's gold imports, one of the primary causes of the current account deficit, fell sharply by 76 percent to 60 tonnes in the April-July period this fiscal on high import duty and other taxes. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 608 crore on August 11, 2014.  However, market participants showed some cautiousness too ahead of key economic data of industrial production (IIP) for June and consumer price index (CPI) for July, to be released after market closing. Shares of public sector undertaking (PSU) banks rallied after the nation's top lender by assets, reported stability in its asset quality for the quarter ended June 30, 2016. State Bank of India (SBI), which accounts for more than a fifth of India's total bank loans and deposits, reported a net non-performing assets (NPA) of around 4%, which  is very comforting given much higher NPA levels in other state-run banks. Further, auto stocks like Mahindra & Mahindra and Tata Motors gained traction after the Supreme Court lifted the ban on registration of diesel cars with capacity above 2000cc in Delhi-NCR. Finally, the BSE Sensex gained 292.80 points or 1.05% to 28152.40, while the CNX Nifty rose by 80.00 points or 0.93% to 8,672.15. Indian markets remained closed on Monday on account of Independence Day holiday.