Markets to give up some last session gains amid weak global cues

The Indian markets bucking the trend rallied in the last session and the benchmarks surged to their record highs, reacting to the assembly election results and improvement in Industrial output. Today, the start is likely to be cautious and the markets may give up some gains amid weak global cues, as the US central bank is almost universally expected to raise its benchmark interest rates, a move that just a few weeks ago was viewed by the markets as unlikely. Traders will also be concerned with the Retail or CPI inflation rising to 3.65 percent in February, as compared to 3.17 per cent in January and 5.26 per cent a year ago, mainly on account of surge in price of food items. Meanwhile, Chief Economic Advisor Arvind Subramanian has said that demonetisation can be called successful only if the amount of currency in circulation comes down over time and there is an increase in tax compliance. The PSU oil marketing companies will keep buzzing, as the international crude oil prices slid to the lowest since late November after OPEC reported a rise in global crude inventories and raised its forecast of production in 2017 from outside the group.

The US markets turned lower in the last session ahead of Wednesday's interest rate decision from the Federal Reserve. Also, the energy stocks continued their decline after the crude oil futures extended steep recent losses. The Asian markets have made a soft start following the decline in US markets overnight, with some of the indices trading lower by about half a percent ahead of an expected interest-rate hike by Federal Reserve policy makers.

Back home, Indian benchmark equity indices staged a blockbuster performance on the first day of the new week by vivaciously rallying over one and half percent in the session and conquering their important psychological levels. Investors continued to build hefty positions across the board as sentiments got a boost from BJP’s stunning victory in Uttar Pradesh assembly elections, which gives it room for adding more representatives in the Rajya Sabha. On Saturday, the BJP won an unexpected 312 out of 403 seats in the assembly elections of the India’s largest state, raising expectations of continued political stability, smooth implementation of a proposed goods and services tax and reforms in areas such as labour laws and land acquisition. Furthermore, Investors’ morale also remained upbeat as Industrial production bounced back into expansion in January, kicking off the financial year’s last quarter on a positive note albeit amid expectations that it will bear the brunt of demonetisation. The index of industrial production (IIP) rose 2.7% in January from a year ago, the second fastest monthly growth this financial year behind 5.7% recorded in November 2016. Some support also came with the report that India's foreign exchange reserves rose $1.2 billion to reach $364 billion as on February 17, 2017. Buoyed by a strong domestic market and a stable Rupee, the central bank has been buying foreign currency in order to strengthen its foreign exchange reserves. However, markets participant didn’t give any response to wholesale price index-based inflation (WPI), which jumped to a 39-month high of 6.55% in February compared to 5.25% in the previous month on the back of expensive food and fuel items, even as manufacturing products saw a decline in inflation. The data justifies the Reserve Bank of India's caution on loose monetary stance amid expected increase in interest rates in the United States in the next few days. Finally, the BSE Sensex surged 496.40 points or 1.71% to 29442.63, while the CNX Nifty was up by 152.45 points or 1.71% to 9,087.