Markets likely to make positive start on firm global cues

Indian equity markets edged higher for a second straight session on Monday, as investors looked ahead to key macroeconomic data due this week for direction. Today, the start is likely to be on positive side as investors keep an eye on the GDP data for December quarter due on Wednesday. Traders will get some support with report that India’s economic recovery is expected to have gathered momentum as economists expect India’s GDP to grow 6.9 percent in the December quarter, the fastest pace in a year and up from 6.3 percent in July-September quarter, on the back of increased spending by consumers, businesses and the government.  Investors will also get some encouragement with economic think-tank NCAER’s report that the Indian economy is projected to grow at 6.7 per cent in the current financial year and 7.5 per cent in 2018-19. The figures are in line with the growth projections in this year’s Economic Survey, which said India is likely to clock 7-7.5 per cent growth in 2018-19, up from 6.75 per cent in the current fiscal. Some support may also come with report that the government plans to cut red tape and ease rules for foreign portfolio investors (FPI), as it seeks to attract more investments into Asia’s third-largest economy. However, some concern may come later in the trade on report that investments in the domestic capital market through participatory notes (P-notes) plunged to a nearly eight-and-a-half-year low of Rs 1.19 lakh crore in January-end amid stringent norms put in place by regulator SEBI to check misuse. Traders may also remain worry on private report stating that inflation is expected to trend higher and though RBI may keep policy rates on hold in 2018-19, there are also increasing chances of a rate hike.

The U.S. stocks rose sharply on Monday, as treasury yields pulled back further partly in reaction to dovish comments by St. Louis Federal Reserve President James Bullard warning against aggressive interest rate hikes not supported by incoming data. Asian stocks held near three-week highs in morning deals, thanks to higher oil prices and easing U.S. borrowing costs. The Japanese stock market is notably higher on Tuesday, extending gains from the previous session as yen weakened.

Back home, Monday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls tightened their grip on Dalal Street, with Nifty and Sensex recapturing their crucial 10,550 and 34,400 levels, respectively. The markets’ mood remained up-beat throughout the day and benchmarks fervently gained from strength to strength, as investors continued hunt for fundamentally strong stocks. Key gauges made a gap-up opening on a private poll showing that India’s economy grew at its fastest pace in a year in the October-December quarter as consumers, businesses and the government stepped up spending. This suggests that disruptions from a shock ban on high-value currency notes in November 2016 and the chaotic launch of a goods and services tax (GST) in July are fading. The markets also got boost with the report that Commerce and industry ministry has appointed four institutes, including IIFT and ICAI, to interact with stakeholders and suggest measures to push India’s ranking in ease of doing business index. Markets extended rally in second half of trade to end near intraday high levels, as some support came with Union Minister Parshottam Rupala’s statement that the Centre was making concerted efforts to double the income of farmers by 2022 and asked scientists, and others concerned to tackle the challenges being faced by the agriculture sector. He opined that scientists, environmental and agricultural experts must have a global outlook and local approach to combat the challenges in agricultural and environmental sectors. Adding to the optimism, a private report highlighting that focus on investments, productivity will lead to sustainable growth rate. According to the report, India needs to industrialize further and target 25 per cent of GDP pie for manufacturing sector by 2025 in order to achieve double-digit investment growth and create jobs for its swelling labour force. Finally, the BSE Sensex surged 303.60 points or 0.89% to 34,445.75, while the CNX Nifty was up by 91.55 points or 0.87% to 10,582.60.