Benchmarks likely to make positive start of new week; CPI data eyed

Indian markets ended higher for second straight session on Friday mirroring optimism in world equities, as easing tensions between the US-Iran relieved investors. Today, the start of new week is likely to be positive tracking Asian peers coupled with growth in India’s industrial production data. A rebound in manufacturing activity pulled up November’s overall industrial output, helping it to grow 1.8% after declining for three consecutive months. Output had declined by 3.8% in October after a 4.3% contraction in September, the steepest fall in eight years. Investors will be looking ahead to the retail inflation or consumer price index (CPI) data to be out later in the day. Though, there may be some concern with report that adopting a cautious approach amid the US-Iran tensions, foreign portfolio investors have pulled out a net sum of Rs 2,415 crore from the Indian capital markets in January so far. As per latest depositories data, FPIs invested a net amount of Rs 777 crore in equities and pulled out Rs 3,192.7 crore from the debt segment between January 1-10. Traders may take note of report that the government is likely to opt for auctioning of more cash management bills (CMBs) to meet the debt obligations of government bonds in the next fiscal standing at Rs 3.02 lakh crore to avoid putting pressure on higher borrowings from the market. There will be some cautiousness as the Reserve Bank of India tweaks norms for imposing penalties on payment system operators for not complying with regulatory requirements, with a view to ensure safety and security to various stakeholders, including customers. There will be some buzz in the auto stocks as Automobile industry body SIAM (Society of Indian Automobile Manufacturers) predicted the prices of BSVI vehicles to rise up to 10%. Insurance stocks will be in focus with report that Finance minister Nirmala Sitharaman may announce second-round capital infusion for public sector general insurance companies in the upcoming Budget to improve their financial health. There will be some reaction in power stocks with report that State-run electricity distribution companies’ (discoms) dues to power producers stood at Rs 80,930 crore at the end of November 2019, up 45% from a year earlier. Also, there will be some earnings announcements too to keep the markets buzzing.

The US markets ended lower on Friday after hiring data fell short of estimates and wage growth was the weakest in more than a year. Asian markets are trading mostly in green on Monday ahead of the expected signing on a Sino-US trade deal, though talks on a phase two package are likely to drag on for month.

Back home, Indian equities ended the last trading day of the week in green terrain. After a positive start, indices remained in gaining mood during first half of session, aided with Prime Minister Narendra Modi’s statement that fundamentals of the Indian economy are strong and it has the capacity to bounce back. The street remained optimistic, after the Commerce and Industry Ministry examined revamping of the Special Economic Zone (SEZ) policy to meet the global challenges being faced by Indian exporters. It has also discussed ways for implementation of the remaining recommendations of Baba Kalyani report on SEZ to facilitate ease of doing business in the present global market scenario. In the second half of the trading session, gains got trimmed over Dalal Street, as American economist Nouriel Roubini said that the Indian government has chosen to focus on ideological considerations rather than economic slowdown. He also warned that there can be a loss of popularity if the economy goes down. However, bourses managed to settle higher, tracking firm global markets. Market participants were seen taking a note of Chairman of high-level panel on doubling farmers income, Ashok Dalwai’s statement that the farm policies need to be reoriented to first ensure income security to farmers and later make them businessmen. Finally, the BSE Sensex gained 147.37 points or 0.36% to 41,599.72, while the CNX Nifty was up by 40.90 points or 0.33% to 12,256.80.