Markets to make a flat-to-positive start

The Indian markets in a steady day of trade managed gains of around half a percent in last session. Decline in inflation raised hopes of rate cut by the RBI and propelled the markets to fresh all time highs. Today, the start is likely to be in green and traders will be getting some encouragement with report that India's exports grew by 19.8% to $24.6 billion in April, backed by strong performance from petroleum, engineering and textiles sectors. Though, trade deficit also witnessed about threefold increase to $13.2 billion, due to goods imports in April recording a historic 49.07% year-on-year growth to $37.9 billion - following a surge in gold, oil, coal, chemicals, pearls and precious stones, machinery, transport equipment and electronics imports. Meanwhile, chief statistician TCA Anant has said that India’s growth numbers to be released later this month will include the impact of new data series for industrial output and wholesale price inflation. There will be some buzz in the defence related stocks, as the government is now getting set to clear the much-awaited 'strategic partnership' policy to boost the private sector's role in defence production. The banking stocks too will continue to remain in action, as after PSU lender SBI, private sector lenders ICICI Bank and HDFC too have reduced home loan rates in the affordable segment. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended higher in the last session and the tech-heavy Nasdaq and the S&P 500 once again climbed to new record closing highs, as rise in crude oil generated some buying interest, while report showed homebuilder confidence unexpectedly improved in the month of May. The Asian markets have made a mixed start and some indices extended gains after a surge in oil and weakness in dollar. Though, the Chinese market was in red on weaker industrial production and retail data.

Back home, Indian stock markets witnessed a fairly stable day of trade on Monday as sanguinity got reinforced after consumer inflation in April eased to its lowest in at least five years, reviving a debate on whether the central bank should cut interest rates. Hopes for further easing of inflation got a boost with the India Meteorological Department (IMD) stating that monsoon rains had reached the country's Andaman and Nicobar islands ahead of the schedule. Meanwhile, Consumer Price Index (CPI)-based inflation eased to 2.99% in April, from 3.89% in March, due to lower cost of food items. Also, the inflation based on the wholesale price index (WPI) slipped to a four-month low of 3.85% in April as both food articles and manufactured items showed cooling in prices. The street shrugged off industrial output growth data which slipped to 2.7% in March compared to 5.5% in March 2016, mainly on account of poor performance of manufacturing sector. Adding the optimism among market participants, the private report indicated that trustees of retirement fund body EPFO are likely to raise the investment limit in exchange traded funds (ETFs) to 15% of the investible deposits, from 10% at present, in the current fiscal. The higher limit would help the Employees’ Provident Fund Organisation’s (EPFO) park around Rs 15,000 crore in stock markets in 2017-18 as its investible deposits are close to Rs 1 lakh crore annually. Some support also came with the report that Private equity investments saw a significant upturn in April with deals worth $ 3.16 billion, up 69 per cent from a year ago, due to big ticket transactions. Finally, the BSE Sensex gained 133 points or 0.44% to 30322.12, while the CNX Nifty was up by 44.50 points or 0.47% to 9,445.40.