Markets to make a jubilant start on positive global cues

The Indian markets managed a modestly positive close in last session after much of dilly-dallying, with IT stocks witnessing buying after suffering steep losses in last few sessions. Today, the start is likely to be in green on strong global cues. Traders will also be getting some support with a US think tank report stating that India will be the world’s fastest growing economy during the next five years as China’s economy cools and growth elsewhere sputters, but internal tensions over inequality and religion will complicate its expansion. Meanwhile, Finance Minister Arun Jaitley has warned that economies will become more inefficient and GDP will shrink if protectionist trend emerges in developed economies. Traders will be eyeing the December IIP data due to be announced later in the day. The IT pack may continue their gains on government’s statement that it is engaged with the Donald Trump administration as well as members of the US Congress on concerns regarding the H1B visa issue. There will be lots of lots of important result announcements to keep the markets ticking.

The US markets surged in last session to record highs after showing a lack of direction in the past few sessions, mainly due to comments from US President to announce a plan to lower the tax burden on American business. The Asian markets taking cues from the US markets have made a positive start led by the Japanese market, which is up by over two percent with the gain in dollar. Higher crude oil prices also boosted investor sentiment in the region.

Back home, after trading on a feeble note for most part of the session, Indian benchmark indices managed to negotiate a close in the green terrain, as investors showed renewed buying interests in information technology, Consumer Durables and Realty counters. Investors got some comfort with RBI governor’s statement that there is further scope for banks to reduce lending rates as the Reserve Bank has already brought down its policy rates by 175 basis points since January 2015. Some support also came with Economic Affairs Secretary Shaktikanta Das’ statement that India will be able to pull off a 7% plus growth rate next fiscal as the Budget for 2017-18 has come up with several measures to provide a fillip to various sectors. Further, rejecting arguments that fiscal deficit target of 3.2% is optimistic, he said it is realistic and there is all possibility that revenues will exceed the target, as Budget has not taken into account the demonetisation windfall. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 127.69 crore on February 08, 2017. Adding the anxiety among market participants, RBI’s bi-monthly survey on consumer confidence indicate that Indian households are less confident of their current economic situation as people are uncertain about their immediate income, employment and spending capabilities. Meanwhile, banking stocks declined as RBI held repo rates at 6.25% for the second time in a row, changing its stance to 'neutral' from 'accommodative'. On the other hand, IT stocks gained traction as global IT major Cognizant has guided for a revenue growth of $3.51 billion to $3.55 billion for March quarter. The company expects March quarter non-GAAP diluted EPS to be at least $0.83 per share. Finally, the BSE Sensex gained 39.78 points or 0.14% to 28329.70, while the CNX Nifty was up by 9.35 points or 0.11% to 8,778.40.