Markets likely to make slightly positive start

Indian equity benchmarks remain closed on Tuesday on occasion of Mahashivratri, while positive cues from global markets helped Indian shares to recover from their biggest weekly losses since August on Monday. Today, the start is likely to be flat-to-positive, as market participants will look forward to Wholesale Price Index (WPI) to be released later in the day. Traders will get some support with India’s Retail inflation, measured by the consumer price index (CPI), easing to 5.07% in January 2018, after rising to 5.21% in the month of December. However, India’s index of industrial production (IIP) for the month of December 2017 came at 7.1% as compared to 8.4% in last month. As per the street expectations it was likely to come at 6.4%. The cumulative growth for the period April-December 2017 over the corresponding period of the previous year stood at 3.7%. Some support will also come from private report that Inflation is peaking off and the Reserve Bank of India is expected to cut rates by 25 bps in August if monsoon is normal. Investors will also draw some comfort with Union minister Piyush Goyal’s statement that the country’s economic growth is likely to cross 7.5 per cent in the next fiscal. There will be lots of important earnings announcements too, to keep the markets buzzing.

The U.S. markets edged higher on Tuesday, as traders looked ahead to the release of reports on consumer prices and retail sales on February 14. The data is likely to have a significant impact on how traders perceive the Federal Reserve will act regarding future interest rate hikes. Asian markets were exhibiting mixed trend in early deals on Wednesday despite the slightly firmer lead from Wall Street, which recorded a third consecutive day of gains in the last session.

Back home, Indian markets remain closed on Tuesday on account of Mahashivratri, though Monday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges recouping previous sessions’ losses and ending above their crucial 10,500 (Nifty) and 34,300 (Sensex) levels, as traders opted to buy beaten down but fundamentally strong stocks after recent sell-off. Key gauges made a gap-up opening and traded jubilantly throughout the session on Reserve Bank of India (RBI) Governor Urjit Patel’s statement that stock market bubble will not cause any major problem. He also said transmission of RBI decisions by banks have improved now, partly aided by demonetisation. Some support also came with Finance minister Arun Jaitley expressing confidence over comfortable revenue collection in 2018-19, seeking to remove doubts about any likely slippage in fiscal deficit from the revised target of 3.3% of GDP ahead of the general elections in 2019. Adding to the optimism, the government’s revenue collection continued to register a steady growth in the April-January period, on the back of healthy growth in corporate tax collections. The net direct tax collections up to January, 2018 stood at Rs 6.95 lakh crore, registering a growth of 19.3% higher than the net collections for the corresponding period of last year. The collection indicated that 69.2% of the Revised Estimates of Direct Taxes for FY 2017-18 (Rs 10.05 lakh crore) has been achieved. Traders also took some encouragement with report that India’s external debt has remained within manageable limits as indicated by the external debt indicators, and the country is not among the world’s top debtors. India’s external debt stock stood at $495.7 billion at quarter ending September 2017. Traders also drew some support with private report that retail inflation is expected to moderate and print at 5% after rising consecutively for five months, helped largely by seasonal dip in vegetable prices, while trade deficit is also likely to improve, in January. Finally, the BSE Sensex surged 294.71 points or 0.87% to 34,300.47, while the CNX Nifty was up by 84.80 points or 0.81% to 10,539.75.