Markets likely to make negative start on mixed global cues

Indian equity benchmarks ended higher on Tuesday with underlying sentiment supported by positive global cues ahead of retail inflation and industrial output data, due later in the day. Today, the markets are likely to make pessimistic start amid mixed global cues. Sentiments may remain dampen on report that India’s retail inflation hit a four-month high after jumping to 4.87 percent in May from April’s 4.58 percent driven by costlier food and fuel. Retail inflation, measured by Consumer Price Index (CPI), had fallen to 2.18 percent in May 2017. However, traders may get some support later in the day with report that India’s industrial production grew 4.9 percent in April, as compared with 4.4 percent jump in March. The factory output index growth rate moderated in March after consistently being above 7 percent between November and February. It expanded 6 percent a year ago. Meanwhile, markets regulator Sebi proposed to allow direct listing of Indian companies on overseas bourses and of foreign firms on Indian exchanges, while setting up an expert panel to look into the details. Currently, Indian companies can list their shares through depository receipts abroad, while foreign companies need to go through the Indian Depository Receipt route for listing of equities.

The US markets ended mostly higher on Tuesday, after President Donald Trump and North Korea leader Kim Jong Un sign an agreement aimed at establishing a peace regime on the Korean peninsula. Asian markets trading lower in early deals as investors shifted their focus from the recently concluded U.S.-North Korea summit to the conclusion of the Federal Reserve’s June meeting later in the day.

Back home, extending previous session’s northward journey, Indian equity benchmarks displayed spirited performance on Tuesday, with frontline gauges ending near their crucial 35,700 (Sensex) and 10,850 (Nifty) levels. The markets’ mood remained up-beat throughout the day and benchmarks, after a positive opening, fervently gained from strength to strength, as investors continued hunt for fundamentally strong stocks. Sentiments remained optimistic since beginning with report stating that the Reserve Bank came out with draft guidelines on loan system for delivery of bank credit to improve discipline among larger borrowers enjoying working capital facility from the banking system. Meanwhile, the recent amendments in the bankruptcy resolution framework will help reduce timelines, enhance transparency and improve realisations. Market participants took some encouragement with a private report stating that China and Russia have backed India’s move to revive talks at the World Trade Organization (WTO) to strengthen global norms to protect traditional knowledge from bio piracy and reckless patenting by corporates. Markets extended gains in noon deals as US President Donald Trump and North Korea’s leader Kim Jong Un signed documents that acknowledge the progress of the talks and pledge to keep momentum going, after their summit in Singapore. Building up of positions by participants ahead of release of IIP and inflation data also influenced trading sentiments. Further, some support also came with finance ministry official’s statement that the government is likely to launch a Rs 500-crore credit enhancement fund next month to facilitate infrastructure investments by insurance and pension funds. Adding some optimism, the Union government has formed a new committee under the chairmanship of former Chief Statistician Prof. T.C.A Anant to bring more transparency in employment related data releases. Finally, the BSE Sensex gained 209.05 points or 0.59% to 35,692.52, while the CNX Nifty was up by 55.90 points or 0.52% to 10,842.85.