Markets to make a positive start on strong IIP numbers

Indian equity markets edged higher on Monday, as geopolitical tensions eased somewhat, trade-war worries subsided and a robust U.S. jobs report stoked optimism about global growth. Today, the start of the session is likely to be in green and traders will be reacting positively to the IIP numbers, as strong manufacturing growth and a rebound in the consumer durables sector lifted India's total factory production to 7.5 percent in January from 7.1 percent in December. As per the street expectation it was likely to come at 6.6%. The cumulative growth for the period April-January 2017-18 over the corresponding period of the previous year stood at 4.1%. Traders will also get some encouragement with report that Inflation as measured by the CPI slowed to 4.44% in February from 5.07% in January, mostly due to easing food and fuel prices. Inflation in the food and beverages segment slowed to 3.38% in February from 4.58% in the previous month. Some support will also come with report that foreign direct investment (FDI) has increased steadily in the country with total capital inflows reaching $208.99 billion during April 2014 to December 2017 period. The main sectors that received maximum foreign inflows include services, computer software and hardware, telecommunications, construction, trading and automobile. There will be buzz in defence related stocks after Defence Minister Nirmala Sitharaman said that defence public sector undertakings (PSUs) and ordnance factories in the country have a lot of potential but they need to be revitalised and made more dynamic.

The US markets ended mostly lower on Monday as traders remained on sidelines ahead of data related to consumer and producer price inflation, retail sales, regional manufacturing activity, housing starts and industrial production, to be released later during the week. Asian markets trading mostly in red on Tuesday, as Washington’s policies hit regional steel producers. Japanese Nikkei edged lower in early deals as the yen strengthened after Japanese Prime Minister Shinzo Abe came under renewed scrutiny in a suspected cronyism scandal.

Back home, Monday turned-out to be a jubilant day of trade for Indian equity benchmarks with frontline gauges ending the session with gains of around two percentage points, recapturing their crucial 10,400 (Nifty) and 33,900 (Sensex) levels. After making a gap-up opening, markets gained strength-to-strength and not even an iota of profit booking witnessed on Dalal Street as traders continued to build hefty positions across the board. Sentiments remained up-beat throughout the session as traders took some encouragement with IMF’s statement that the Indian economy now seems to be on its way of recovering from disruptions caused by demonetisation and roll-out of goods and services tax. At the same time, the IMF has underscored the significance of reforms in other key sectors like education, health and improving the efficiency of banking and financial systems. Investors also took some support with industry body FICCI’s report that manufacturers in the country have a positive outlook for the sector in the January-March quarter on the back of higher production. The proportion of respondents reporting higher output growth during the Q4 2017-18 has increased significantly to 55 per cent from 47 per cent in Q3. Sentiments also remained up-beat as Union commerce and industry minister Suresh Prabhu exuded confidence that India will become a $5 trillion economy in the next seven years, adding that India will be a bigger economy than China at some point of time. He also said that manufacturing sector would contribute $1 trillion, services sector $3 trillion and the rest would come from agriculture for the country to become a $5 trillion economy in the next seven years. Some support also came with a report stating that the Centre is expecting to get around Rs 8,044 crore on account of dividend from Coal India as the miner's board approved payment of interim dividend for the financial year 2017-18 at a rate of Rs 16.50 per share. The miner's total payout on account of this would be to the tune Rs 10,242 crore. Finally, the BSE Sensex surged 610.80 points or 1.83% to 33,917.94, while the CNX Nifty was up by 194.55 points or 1.90% to 10,421.40.