Markets to make a flat but positive start

The Indian markets surged to fresh record highs on firm global cues with strong industrial output data boosting sentiment. Today, the start is likely to be flat but in green, supported by the unexpected drop in the wholesale price inflation to 3.58 percent at the month of December. Traders however, will be a bit cautious with the merchandise export growth slowing sequentially to 12.4% in December, while imports jumping 21.1% during the month, aided by a spike in crude oil prices and a favourable base. The trade deficit widened to its highest level in over three years in December to $14.9 billion, a three-year peak. However, excluding the almost 35% rise in oil purchases from overseas, overall imports rose 17.2% in December. The export oriented stocks will be in focus, as the various export bodies have expressed concern over delay in refunds under GST and have written to the Union Commerce Ministry seeking faster refunds. There will be lots of important companies announcing their quarterly earnings today, keeping the markets buzzing.

The US markets remained closed in the last session on Martin Luther King Day holiday, unable to give any cues to the other global markets. The Asian markets have made a mixed start taking a breather in the absence of fresh catalysts to spur the rally on. The yen halted a five-day advance as Japanese Finance Minister Taro Aso said sudden moves in exchange rates are a problem.

Back home, continuing their record hitting spree, Indian equity benchmarks once again traded jubilantly and settled at all time closing levels with frontline gauges surpassing their crucial 34,800 (Sensex) and 10,700 (Nifty) levels for the first time ever. Markets started the session with gap-up start, as traders reacted positively to the IIP numbers, as an exponential rise in the manufacturing output lifted India's total factory production by over 8 percent in November from 1.99 percent in October and 5.1 percent during the corresponding period of 2016-17. On a year-on-year basis, the manufacturing sector expanded by 10.2 percent, whereas mining’s output inched-up by 1.1 percent and the sub-index of electricity generation increased by 3.9 percent. Some support also came with the wholesale price index-based inflation easing to a three-month low of 3.58 per cent in December, down from 3.93 per cent the month before. This decline comes after recent data released by the central statistics office (CSO) had shown that retail inflation had risen to a 17-month high of 5.21 per cent in December up from 4.88 per cent in November. However, India’s annual retail inflation data accelerated in December to a 17-month high of 5.21 percent, mainly driven by faster rises in prices of food and fuel products. Some support also came with report that foreign investors have pumped in over Rs 5,200 crore in the Indian capital markets this month so far on anticipation of recovery in corporate earnings and attractive yields. Traders also took some encouragement with a foreign brokerage report enlightening that Indian economy is expected to witness an average GDP growth of 7.3% over 2020-22. According to the global financial services major, the structural growth story in India remains strong from a medium term perspective. The report highlighted that the uptick in the private capex cycle, which it anticipates will begin in 2018, will ensure that the economy enters into a sustained and productive growth cycle. Also traders reacted positively to report that the World Economic Forum (WEF) has ranked India at 30th position on a global manufacturing index -- below China’s 5th place but above other BRICS peers, Brazil, Russia and South Africa. Finally, the BSE Sensex surged 251.12 points or 0.73% to 34,843.51, while the CNX Nifty was up by 60.30 points or 0.56% to 10,741.55.