Markets to make a cautious start ahead of IIP data release

The Indian markets lost their way completely in the final hours and made just a flat close, positive Asian cues and some solid earnings results too failed to support the markets. Today, the start of the day is likely to be cautious on mixed global cues and traders will be eyeing government release of a new series of Index of Industrial Production (IIP) and Wholesale Price Index (WPI) later in the day, in a bid to map economic activity more accurately. Traders will be getting some support with SBI Research’s Ecowrap report, which has said that the easing of crude oil prices will have positive effect not only on inflation but also on GDP growth. It has said that average crude oil prices will be around $ 45 for the next half of this year and this, coupled with positive macro fundamentals, could translate into better growth numbers for the country. Meanwhile, Chief Economic Adviser Arvind Subramanian slamming global credit rating agencies for not upgrading India despite clear improvement in its economic fundamentals has said that they are following 'inconsistent' standards while rating India and China. There will be some buzz in the textile stocks, as the Finance Ministry has extended by one year the validity of existing anti-dumping duty on Partially Oriented Yarn (POY) imports from China. There will be lots of important earnings announcements to keep the markets in action.

The US markets reacting to some weak earnings made another soft closing in the last session, with traders fearing that consumers are not spending enough to drive strong economic growth. The Asian markets have made a mixed start and some of the indices are in red on concern about the appetite of US consumers to keep spending. The Japanese market too was in red as the yen rose against the dollar.

Back home, it turned out to be a session of moderate gains for the Indian stock markets, which came off the highest point of the day in dying hours of trade as investors booked profits in recent outperformers such as Bharti Airtel and Hindustan Unilever, while negative opening in European markets also capped gains. However, the benchmarks managed to settle at record closing highs for the second straight session as local sentiments continued to show signs of improvement amid optimism over Indian Meteorological Department's prediction of a 'normal' monsoon this calendar. IMD said that the prospects of the monsoon have brightened due to reduced chances of El-Nino. With results of several front line stocks due over the course of the next few sessions and the data on industrial output and consumer price inflation due on Friday, the mood was slightly cautious. Furthermore, with the indices and various blue chip stocks hovering around all-time highs, market participants are looking for some direction to build up significant positions. Investors remained cautious with the RBI's data suggesting that new financial year began on a sour note for bank credit growth, which slipped to 4.32% in the fortnight to April 28, much lower than the 63-year low level of 5.08% in FY17. However, sentiments got some support with the report that Prime Minister Narendra Modi is setting up a task force under the chairmanship of the Vice Chairman of NITI Aayog Dr Arvind Panagriya, with an aim to create policies on employment based on credible data. The Prime Minister has directed that this task be expedited so that policies on employment can be formulated with a proper appreciation of impacts, based on credible data. Meanwhile, Auto stocks surged on expectations of lower interest rates after a better monsoon forecast eased inflation fears in a country that depends heavily on rains to irrigate its farmlands. Finally, the BSE Sensex gained 2.81 points or 0.01% to 30250.98, while the CNX Nifty was up by 15.10 points or 0.16% to 9,422.40.