Markets likely to open in green on Thursday

Indian markets rose for the fourth straight session on Wednesday, with strong global cues underpinning sentiment. Today, the start of session is likely to be in green following overnight gains on Wall Street. Traders will be taking encouragement as the World Bank said Narendra Modi government’s Production-Linked Incentive (PLI) Scheme will likely help India’s economy grow at 8.7% in the next financial year 2022-23, beating emerging market peers including China. However, traders may be concerned on account of subdued macro-economic data. India’s industrial production growth remained subdued for the third straight month and expanded by 1.4 per cent in November, mainly due to the waning low base effect, while the mining sector showed good performance. Also, rising prices of essential kitchen items pushed the retail inflation to a six-month high of 5.59 per cent in December, close to the Reserve Bank’s upper tolerance limit of 6 per cent. Also, food inflation was at 4.05 per cent in December this fiscal compared to 1.87 per cent in the preceding month. There may be some cautiousness as rating agency ICRA said it expects a miss in the disinvestment target to cause the government’s fiscal deficit to print at Rs 16.6 lakh crore or 7.1 per cent of the GDP in FY2022, overshooting the budgeted target. IT stocks will be in limelight reacting to their third quarter results. Textile industry stocks will be in focus with a report that the country's exports of textiles and apparel, including handicrafts, rose to $29.8 billion during April-December this fiscal as compared to $21.2 billion in the same period last year. There will be some reaction in edible oil industry stocks as Solvent Extractors Association (SEA) said India's imports of palm oils declined by 29.15 per cent to 5.44 lakh tonnes in December 2021, but the rise in shipments of RBD palmolein is threatening the survival of domestic refineries. Telecom stocks will be under watch after the communications ministry said telecom operators Vodafone Idea (VIL), Tata Teleservices and Tata Teleservices (Maharashtra) (TTML) will not become public sector undertakings after their interest payable on dues are converted into government equity.

The US markets ended higher on Wednesday after retail inflation jumped to a 40-year high of 7 per cent in December but within the forecasts, thus suggesting that the Federal Reserve will not have to hike interest rates too aggressively. Asian markets are trading mixed on Thursday as traders digested the latest US inflation data and remained concerned about the resurging coronavirus cases in the country.

Back home, Key benchmark indices extended their winning run into the fourth straight trading session and ended with gains of around a percent on Wednesday backed by solid gains in index heavyweights Mahindra & Mahindra, Bharti Airtel and Reliance Industries. The benchmark indices made a gap-up opening and remained higher throughout the session, as investor sentiments magnified with the World Bank retained its FY22 growth forecast for India at 8.3 per cent but upgraded it to 8.7 per cent for FY23, from 7.5 per cent estimated earlier, citing improving growth prospects, especially a reviving private capex cycle. Some optimism came with former chief economic adviser Arvind Virmani’s statement that the Indian economy is likely to register a growth of 9.5 per cent in this financial year. Some support also came in as preliminary data from the commerce ministry showed that the country's exports grew 33.16 per cent to $7.63 billion during January 1-7 period on account of healthy performance by various sectors, including engineering, petroleum and gems and jewellery. The benchmark indices steadily held their strong gains in afternoon trade, as reports suggest the fast-spreading Omicron variant is not virulent and hospitalisation cases are very low. Also, Mumbai Mayor Kishori Pednekar stated that the numbers of COVID-19 cases and its fast spreading variant Omicron were slowing coming down in the city. Domestic sentiments were positive, as the government extended till March 15 the deadline for corporates to file Income Tax returns for the fiscal ended March 2021. The deadline to file tax audit report and transfer pricing audit report for 2020-21 fiscal too has been extended till February 15. Traders overlooked a domestic rating agency ICRA’s report stated that lockdowns to contain the spread of the third COVID wave hurt loan collections and new lending by non-banks, and will in turn impact securitization volumes. Finally, the BSE Sensex rose 533.15 points or 0.88% to 61,150.04 and the CNX Nifty was up by 156.60 points or 0.87% to 18,212.35.