Benchmarks likely to make cautious start; IIP data, Infosys result eyed

Indian markets ended higher with gains over one and half a percent each on Thursday as investors remained optimistic amid temporary de-escalation of a heated rhetoric between the US and Iran. Today, the markets are likely to get a cautious start ahead of industrial growth data for the month of November to be out later in the day. Also, traders will be looking for the third quarter results with Infosys is scheduled to announce its December quarter numbers later in the day. The IT service provider is expected to post revenue growth of 0.9% to 2.1% on a sequential basis for the quarter ended December 31, mainly on account of the company’s cross-currency gains and business transfer of Eishtec in Ireland. There will be some cautiousness with a private report indicating that increase in vegetable prices has probably pushed retail inflation to its highest in over five years in December, far more than the Reserve Bank of India’s medium-term target of 4% for a third straight month. Traders will be concerned with report that amid a slowdown in economic activity, state-owned Sidbi said credit supply growth to the commercial sector has slowed to a multi-year low of 8.1 per cent for the 12 months ended September 2019. However, some support may come later in the day with Prime Minister Narendra Modi’s statement that fundamentals of the Indian economy are strong and it has the capacity to bounce back. There will be some buzz in the aviation stocks with the International Air Transport Association’s (IATA) data showing that reaching double digits for the first time since January 2019, domestic passenger traffic growth in India jumped to 11.3% in November as compared to the corresponding month of 2018. Telecom stocks will be in focus with industry body PHDCCI’s statement that auction of 5G spectrum should be taken up after 2-3 years, which will help the government get proper valuations of the 5G airwaves. There will be some reaction in fast moving consumer goods (FMCG) stocks with report that despite some definite signs of improvement in economy in the near future, CARE Ratings does not expect much improvement in Indian FMCG sector until Q3 FY21.
The US markets ended higher on Thursday as tensions between Iran and the US eased for the time being, with tech shares outperforming. Asian markets are trading mostly in green on Friday following the easing of US-Iran tensions, and after US stocks shot to new highs overnight.

Back home, Indian equity markets came back in strong rally mood on Thursday, with Sensex & Nifty ending higher by around 1.55% each. The start of the day was on strong note, aided with industry body FICCI’s statement that the government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5% during 2019-20. Adding some relief, SBI Chairman Rajnish Kumar said that banking sector is going to see good recoveries from non-performing assets in the third & fourth quarters of current fiscal, helped by resolution of some large stressed accounts. Key bourses maintained their gaining momentum in the second half of the trading session, on the back of firm cues from the global markets. Investors were seen taking a note of credit rating agency, India Ratings and Research’s (Ind-Ra) report that India will have to raise its labour productivity growth to 6.3 per cent to achieve 8 per cent GDP growth. The labour productivity growth in FY19 was 5.2 per cent. The street paid no heed towards the World Bank’s latest report stating that growth in India is projected to decelerate to 5% in financial year (FY) 2019/20, which ends March 31, amid enduring financial sector issues. Finally, the BSE Sensex gained 634.61 points or 1.55% to 41,452.35, while the CNX Nifty was up by 190.55 points or 1.58% to 12,215.90.