Markets to open slightly in green; WPI data eyed

Indian markets ended at record highs on Monday propelled by gains in Infosys amid positive industrial growth data. Today, the start of session is likely to be slightly in green following positive global cues amid hopes of further measures from government in the Budget 2020 and optimism over Q3 earnings. Investors will be looking ahead to the Wholesale Price Index (WPI) data to be out later in the day. Though, the upside may remain capped as the government data showed that  India's retail inflation spiked to a five-year high in December, breaching the upper end of the RBI's 2-6 percent target for the first time since July 2016. Inflation increased notably to 7.35 percent from 5.54 percent in November, driven by higher food prices. In the same period last year, inflation was 2.11 percent. Also, there may be some cautiousness with a private report indicating that the production of coarse grains, pulses, oil seeds and sugarcane is expected to decline in the summer season of 2019-20 due to late monsoon and erratic and heavy rains later. Traders may take note of report that Markets regulator SEBI has deferred by two years till April 2022 its directive for companies to separate the roles of chairman and managing director in view of demand from the corporates and to keep compliance cost lower amid a slowing economy. Meanwhile, the government is moving ahead to make Pension Fund Regulatory and Development Authority (PFRDA) as the sole watchdog for all pension products in the country and aims to bring the amended PFRDA Act in the upcoming budget session. There will be some buzz in the metal stocks as India imposed anti-subsidy duty for a period of five years on copper wire rods from Indonesia, Malaysia, Thailand and Vietnam after concluding a probe that these imports have impacted domestic players. There will be some reaction in cement stocks with a private report that amidst weakened demand conditions, the total installed cement capacity in the country is expected to cross half a billion tonne this year. MSMEs stocks will be in focus with private report said that commercial credit to micro, small and medium enterprises (MSMEs), which had been growing in the past couple of years, slowed down in the last two quarters. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended higher on Monday fuelled by optimism about the signing of a preliminary US-China trade deal, as well as upcoming fourth-quarter earnings reports. All the Asian markets are trading in green on Tuesday as signs of goodwill between China and the US supported optimism for global growth, with the world’s two biggest economies preparing to formalise a trade-war truce.

Back home, Indian equity bourses touched new record closing highs on Monday, with Sensex and Nifty gaining around 0.60% each. After a strong opening, indices remained bullish, as India's factory output growth, measured by the Index of Industrial Production, grew 1.8% in November 2019, mainly on account of improvement in the manufacturing sector. Investors remained in optimistic mood, as the Union minister for micro, small and medium enterprises (MSMEs) Nitin Gadkari said that the Centre is formulating a scheme to encourage import substitute products in the manufacturing sector in order to save foreign exchange. Firm trade persisted over the Dalal Street throughout the trading session, on account of positive cues from the global markets. Market participants got comfort, amid a report stating that the country's foreign exchange reserves touched a record high of $461.157 billion, after it surged by $3.689 billion in the week to January 3. However, upside remained capped, after the SBI research report stated that the economic slowdown has adversely impacted employment generation in the country as nearly 16 lakh fewer jobs are projected to be created in FY20 compared to 89.7 lakh fresh jobs in FY19. Finally, the BSE Sensex gained 259.97 points or 0.62% to 41,859.69, while the CNX Nifty was up by 72.75 points or 0.59% to 12,329.55.