Markets to make gap-up opening ahead of IIP, CPI data

Indian markets ended higher on Monday with gains of over a percent each and posted their biggest gain in nearly six months, amid sustained foreign fund inflow coupled with buying across-the-board, barring IT counter. Today, the markets are likely to make gap-up opening following firm trade in global markets. Investors will be looking ahead to macroeconomic data such as Index of Industrial Production (IIP) and Consumer Price Index (CPI) to be announced after the market hours. Some support may come with a report that in a major overhaul of oil and gas exploration permits, the government will not charge any share of profit on hydrocarbons produced from less explored areas as it looks to attract the elusive private and foreign investment to raise domestic output. Traders may take note of report that the Reserve Bank of India (RBI) board, which included the present Governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on the country's economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace. Meanwhile, the Goods and Services Tax (GST) Council is scheduled to meet on March 19 to finalise guidelines to support the changed tax rate structure for underconstruction houses. Besides, the National Stock Exchange (NSE) has launched weekly options on the NIFTY IT Index. The NIFTY IT index options are already available for three monthly expiration cycle. There will be some buzz in the banking sector stocks with Care Ratings’ report that the average liquidity deficit of Indian banking system for the week-ended March 8 moderated to a four-week low at Rs 30,664 crore. It added that the easing of liquidity deficit can be attributed to an increase in foreign inflows in domestic markets and OMO purchases of government securities by RBI. There will be some reaction in solar energy sector related stocks with Crisil Research’s report that India’s target of adding 100 GW of solar project capacity by 2022 is facing headwinds as lack of clarity on policy, frequent bid cancellation and safeguard measures have negatively impacted the sector. Also, there will be reaction in housing finance company’s stocks with global rating agency Moody's report that the National Housing Bank's proposed guidelines to tighten the capital adequacy and leverage norms is credit positive for housing finance company (HFCs) but will not address their issues regarding the key credit risk, funding and liquidity.

The US markets settled higher on Monday as the technology shares led a broad-based rebound, offsetting some of the gloom from Boeing Company’s woes after a deadly airline crash in Ethiopia. Asian markets are trading in green on Tuesday after the European Commission agreed to changes in a Brexit deal ahead of a vote in the British parliament on a divorce agreement.

Back home, Dalal Street witnessed jubilation on Monday, with Sensex and Nifty closing above their 37,000 and 11,150, respectively. The markets made a gap-up opening, as Economic Affairs Secretary Subhash Chandra Garg expressed confidence that fiscal deficit target of 3.4 per cent for 2018-19 would be met as shortfall in indirect tax collection would be compensated by lower expenditure. Adding optimism among traders, Commerce and Industry minister Suresh Prabhu said that the government has set a target of attracting $100 billion in foreign direct investments over the next two years. The minister said the government is conducting a sector analysis for FDI investments and is preparing suitable policies which will help in bringing foreign funds. Investors took encouragement with Railways Minister Piyush Goyal’s statement that the government has brought sustainable changes instead of temporary adjustments. He also said that the government took the fruits of progress to under-developed parts of the country, further highlighting that the country has become perhaps the fastest growing economy in the world from a fragile economy. Bulls held their grip on the markets throughout the session, as Reserve Bank of India (RBI) reported that the country’s foreign exchange reserves increased by $2.599 billion in the week to March 1 to reclaim the $400 billion-mark. The forex reserves stood at $401.776 billion in the reporting week. In the previous week, the reserves had risen by $944.7 million to $399.217 billion. Some support also came with a report that the central government so far transferred Rs 5,215 crore to over 2.6 crore small and marginal farmers under the PM-Kisan scheme announced in the last month's interim budget. The market participants paid no heed towards the latest data report on public debt which showed that total liabilities of the government increased to Rs 83.40 lakh crore at the end of the December 2018 quarter from Rs 82.03 lakh crore in the previous quarter of the current fiscal. Finally, the BSE Sensex gained 382.67 points or 1.04% to 37,054.10, while the CNX Nifty was up by 132.65 points or 1.20% to 11,168.05.