Markets to get a positive start on some supportive data

The Indian markets before going for a holiday had shown a smart bounce back with the major averages adding gains of over half a percent in last session. Today, the start is likely to be in green and traders will be reacting to some positive statements by the Prime Minister Narendra Modi who on 70th Independence Day promising to lead the country on a new track of economic progress, said his government would intensify the fight against black money and corruption. Traders will also be getting some support with report that India’s trade deficit narrowed to $11.45 billion in July from a month ago, following a slowdown in merchandise imports. Also, recording a growth of over 3.9 percent on the back of a healthy rise in shipments of engineering goods,  petroleum products and chemicals, Indian exports in July grew at $22.5 billion. However, there will be some concern too, with wholesale inflation rising to 1.88 percent in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout. The steel stocks will be in action, as domestic crude steel production witnessed a 4.6 per cent increase at 8.45 million tonnes (MT) in July. There will be some buzz in the PSU stocks, on report that the government is in advanced stage of appointing advisers for proposed strategic sales in state-run firms such as Scooters India, BEML, Pawan Hans and Hindustan Prefab.

The US markets made a mixed closing in last session and while the Dow extended its gains amid better-than-expected retail sales data and an abatement of tensions between the U.S. and North Korea, S&P 500 and Nasdaq ended marginally in red. The Asian markets too have made a mixed start tailing the US market, though the attention is turning away from geopolitics, back to economic data. Some indices in the region are up on revival in U.S. retail sales that bolstered prospects that growth will accelerate in the second half.

Back home, snapping five days losing streak, Indian equity benchmarks showed splendid recovery on Monday with frontline gauges garnering gains of three fourth of a percent, as traders opted to buy beaten down but fundamentally strong stocks. After a gap-up opening markets traded with traction through the session and reclaimed their crucial 9,800 (Nifty) and 31,500 (Sensex) levels, though marginal sell off in dying hour of trade pulled key indices below those levels. Sentiments remained optimistic with Niti Aayog Vice Chairman Arvind Panagariya’s statement that resolution of bad loans in the banking system is on right track and will open the door to rapid credit expansion and growth. Some support also came with the report that foreign investors have pumped in over Rs 10,000 crore in the Indian debt markets this month so far, following the RBI’s decision to cut key interest rates. Adding to the optimism, Union Minister of State for Finance and Corporate Affairs Arjun Ram Meghwal said that the number of tax slabs in the Goods and Services Tax (GST) regime would be reduced with improvement in revenue.  Private report stating that the Indian economy is at the cusp of entering its strongest growth phase and a full blown bull market is yet to play out with the wide-based Nifty expected to touch 11,500 in 2018, too aided sentiments. Market participants shrugged off wholesale price index (WPI) inflation data which increased to 1.88% in the month of July versus 0.90% in the month of June and 0.63% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 0.62% compared to a build up rate of 3.81% in the corresponding period of the previous year. Also, investors have not paid any attention towards India’s industrial production data which entered the negative territory in June. India’s industrial output contracted by 0.1% in the month of June 2017, as compared to an expansion of 8% in the previous year-ago period, also lower than 2.8% growth in May. Finally, the BSE Sensex surged 235.44 points or 0.75% to 31,449.03, while the CNX Nifty was up by 83.35 points or 0.86% to 9,794.15.