Markets to make a green but cautious start reacting to TCS numbers

The Indian markets rallied in last session to close at fresh record highs, on rate cut hopes by the RBI in its upcoming policy review on lower inflation and weak industrial production data. Today, the start is likely to be in green but a bit cautious and traders will be concerned with disappointing earnings by the Tata Consultancy Services, India's largest software services exporter whose quarterly profit fell 10 percent sequentially while revenues declined 0.2 percent. The whole IT pack will be in focus as another IT bellwether Infosys will be announcing its numbers today. All eyes will be on a high-profile meeting chaired by Prime Minister Narendra Modi to review the country's foreign direct investment policy, where further easing of restrictions may also be discussed.  Traders will also be eyeing the inflation data based on wholesale price index (WPI) for June slated to be announced later in the day.  There will be some buzz in the insurance space on reports that HDFC Life Insurance may call off its proposed takeover of the Max group's life insurance business as the two have not been able to arrive at a mutually agreeable alternative structure for the transaction.

The US markets managed another positive close in last session despite a lackluster trade, as traders seemed reluctant to make more significant moves ahead of the release of some key economic data and earnings news. The Asian markets have made a mixed start and some of the indices are marginally in red, though others are heading for strongest week since March.

Back home, bulls tightened their grip on Dalal Street, with frontline gauges extending their record hitting streak for fourth straight session with Sensex conquering 32,000 mark, while Nifty settled just shy of 9,900 mark. Sentiments remained up-beat throughout the session and markets traded with traction, as tepid data of industrial output coupled with record low inflation figures have rekindled hopes of a rate cut when the RBI reviews its monetary policy on August 2. Industrial output growth of India slowed down to 1.7% in the month of May 2017, as compared to 8% in the same month last year and 3.1% in April 2017, mainly due to poor performance of mining and manufacturing, while India’s retail inflation hit a record low of 1.54% in June 2017, down from 2.18% in May and 5.77% in June last year. June’s retail inflation was lowest since the government began issuing data based on the consumer price index (CPI) in 2012. Some support to the markets also came with rating agency Fitch’s report that the global sovereign credit cycle is likely to turn less negative in 2017 as the global GDP growth forecast for 2017 and 2018 had improved. Traders also took some encouragement with report that India’s overseas shipments to top 10 destinations worldwide which include the countries like US, Japan, Hong Kong and UAE have gained strength in the passing financial year. According to the industry body, the PHD Chamber of Commerce and Industry (PHDCCI), the country’s share of exports to top 10 destinations grew to 51.6% in the financial year 2016-17 from 49% in the financial year 2013-14. Finally, the BSE Sensex surged 232.56 points or 0.73% to 32,037.38, while the CNX Nifty was up by 75.60 points or 0.77% to 9,891.70.