Markets likely to get mildly positive to cautious start ahead of GDP data

The Indian markets recovering from early choppiness posted modest gains in the last session, with benchmark indices extending their record breaking run on hopes of timely arrival of monsoon rains. Today, the start is likely to be mildly in green, though some cautiousness will be there ahead of the fourth quarter GDP numbers to be released post market hours.  Meanwhile, India`s former chief statistician Pronab Sen has said that the country`s GDP for 2016-17 will get a 50 basis points (bps) push to 7.6 percent from the government`s estimate of 7.1 percent, due to the recent revision of the base year of the Wholesale Price Index (WPI) and the Index of Industrial Production (IIP). Traders will continue getting encouragement with Southwest monsoon arriving in Kerala on the expected date this year and also advancing into some parts of the Northeast India. Also, Prime Minister Narendra Modi while speaking at the Indo-German Business Summit in Berlin has said that India has one of the most liberal FDI policy regimes in the world and more than 90 percent of foreign investment flows are under automatic route. There will be some buzz in the markets with Revenue Secretary Hasmukh Adhia did not ruling out the scope for rationalisation of tax rates fixed on various goods and services under the GST regime to be implemented from July one. The aviation stocks will be in action with Civil Aviation Ashok Gajapathi Raju stating that average airfares dropped 18 percent in 2016 and additional capacities can further bring down the fares. There will be lots of important earnings announcements to keep the markets in action.

The US markets snapped their long winning streak in the last session, after data showed US consumer confidence unexpectedly fell in May, the second consecutive monthly decline. Major weakness was seen in the energy and banking stocks.The Asian markets have made mostly a positive start led by the Chinese market after country’s manufacturing data exceeded estimates.

Back home, Indian benchmark indices managed to extend the winning momentum for the fourth consecutive day and settled at fresh closing highs on Tuesday, as arrival of monsoon rains cheers, but the gains were capped as the investors booked profit in recent outperformers. The monsoon, which delivers about 70% of India's annual rainfall, arrived at the southern Kerala coast today, in line with forecasts, brightening the outlook for higher farm output and robust economic growth. Simultaneously, the onset is also likely over Lakshadweep, coastal Karnataka, some parts of Tamil Nadu and most parts of northeastern states in the next 24 hours.  Despite settling with only two tens of a percent gains, the frontline indices managed to outclass all the peers in Asia and Europe by quite a margin. The global markets continued to exhibit somber trends as investors at large remained cautious on worries about a Greek bailout and the possibility of an early election in Italy. Sentiments got some support with World Bank's expectation that India, the fastest growing major economy in the world, will grow at 7.2% in the current fiscal and further up to 7.7% by 2019-20 on strong fundamentals, reform momentum and improving investment scenario. It noted that demonetisation in November 2016 caused a slight disruption to India's growth recovery, following a favourable monsoon last fiscal, but things seem to be bettering. However, weak trend in global markets, continued foreign fund outflows and muted earnings posted by some blue-chip companies, have limited the gains. Meanwhile, India's capital market regulator has proposed to tighten rules on offshore derivative instruments (ODI) by imposing 'regulatory fees' and prohibiting the sales of such products unless they are issued for hedging purposes. Finally, the BSE Sensex gained 50.12 points or 0.16% to 31159.40, while the CNX Nifty was up by 19.65 points or 0.20% to 9,624.55.