Benchmarks likely to make cautious start on weak macro-economic data

Indian equity markets extended their gains for second straight session on Tuesday tracking positive trends in global markets and improved domestic sentiments amid overseas fund inflows. Today, the markets are likely to make cautious start amid weak macro-economic data coupled with mixed cues from global markets. On the domestic economic front, the latest data from Central Statistics Office (CSO) showed that India’s Index of Industrial Production (IIP) slipped to 1.7% in January from 7.5% a year ago. Subdued performance of the manufacturing sector, especially capital and consumer goods, mainly pulled down the growth in industrial production. Besides, Retail inflation rose to four-month high of 2.57% in February. Consumer Price Index (CPI) stood at 1.97% in January and 4.44% in February 2018. Food inflation based on CPI was in negative at 0.66% in February 2019. However, some support may come later in the day with the Reserve Bank of India’s (RBI) statement that it would infuse Rs 12,500 crore into the system through open market operations (OMOs) on March 14. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of the government securities under OMOs. Traders may take note of IT industry body Nasscom’s report that public sector firms across half of the states along with the banking and financial sector are driving blockchain adoption in the country. Meanwhile, markets regulator SEBI has withdrew the 20% limit on investments by Foreign Portfolio Investors in corporate bonds of an entity. In a notification, the regulator said the restriction is being withdrawn in accordance with a circular issued by the Reserve Bank of India (RBI). There will be some buzz in the media and entertainment (M&E) industry stocks with Ficci-EY report stating that the M&E industry is expected to cross the Rs 2.35-lakh-crore mark (around $ 33.6 billion) by 2021, clipping at 11.6% annually. There will be some reaction in electricity distribution companies stocks with ICRA’s report that inadequate revision of rates along with delay in filing tariff petitions are likely to remain an area of concern in fiscal 2020 for distribution companies (Discoms).

The US markets ended mostly higher on Tuesday, taking cues from global stocks which rose after last-minute tweaks to Britain's deal to leave the European Union that eased some fears of a no-deal Brexit. Asian markets are trading mostly in red on Wednesday amid reports that British Prime Minister Theresa May's Brexit plan was soundly defeated by lawmakers.

Back home, bulls were on a run during Tuesday’s trading session, with the both Indian equity indices, the Sensex and the Nifty, closing the day higher by smart gains of 482 and 133, respectively. Key indices made a fabulous start, aided by a private report stating that hiring activities registered 16 per cent growth this February mainly led by the IT and software industry that clocked a 38 per cent growth. The Naukri JobSpeak Index for February 2019 stood at 2,415 from 2,087 in February 2018. Adding optimism among the market participants, the Cotton Textiles Export Promotion Council (TEXPROCIL) Chairman K.V. Srinivasan said that rebate of state and central taxes will improve the competitiveness of made ups products in the export markets. Buying also crept in with a report that key policymakers from India and African nations will brainstorm on strategies for scaling up bilateral trade volume to $150 billion in the next few years at the India-Africa Project Partnerships Conclave. Domestic Sentiments remained upbeat throughout the day, with a report stating 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. Positive cues from the global markets also supported the rally. Investors took a note of the report that the Reserve Bank of India’s (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. Finally, the BSE Sensex gained 481.56 points or 1.30% to 37,535.66, while the CNX Nifty was up by 133.15 points or 1.19% to 11,301.20.