Markets to get a gap-up start on good global cues

The Indian markets suffered some profit booking in last session with some blue chips being on sellers’ radar after their recent gains. Today, the start is likely to be a good gap-up one and the markets will follow the gains in the regional peers. Though, the whole week is likely to be buzzing with different domestic as well as global events lined up for the week. Traders will first eye the wholesale price index (WPI) inflation data of August scheduled to be released today after market hours, followed by US Federal Reserve meeting and the Reserve Bank of India’s (RBI) monetary policy review. WPI inflation is likely to shoot up to six-month high and will be the biggest challenge of RBI Governor Raghuram Rajan’s first policy review. There will be some concern too, with a FICCI survey saying that India Inc’s business confidence has plunged to the lowest level in 17 quarters, as cost and availability of credit constrain growth in a weak demand scenario. Meanwhile, the government has rationalised the duty drawback and brought more items under the scheme for tax refund to exporters to give a boost to overseas shipments. There will be buzz in the PSU oil marketing companies after they hiked petrol prices on Friday by Rs1.63 per litre excluding taxes, the seventh increase since June, on rising crude oil prices and falling rupee. Also, there will be lots of scrip specific actions based on the advance tax payment made for the second quarter.

The US markets despite volatility on mixed economic news, made a green closing in last session. Though the concern related to Fed’s meeting kept looming. The Asian markets have made a strong start rejoicing the report that Lawrence Summers has withdrew from consideration to be the next Federal Reserve chairman, paving the way for Janet Yellen, who is said to be favouring a slower reduction in US stimulus.

Back home, Indian equity benchmarks snapped the extremely volatile day of trade on an absolute flat note on Friday as investors remained on sidelines ahead of WPI data slated to be released on September 16.  Moreover, investors were also awaiting the US Federal Reserve’s decision on stimulus tapering, as well as RBI policy review later next week. Markets after initial sluggishness, entered into green terrain and traded in fine fettle as sentiments remained up-beat with the industrial production rebounding to 2.6% in July from a year earlier, much better than the general street expectation of marginal contraction-to-flat numbers and far better than -2.2% figure of the last month. In other development, retail or CPI inflation, eased slightly to 9.52% in August over the previous month’s 9.64%, following softening in prices of almost all commodities, except vegetables. But, later they turned red after Prime Minister's Economic Advisory Council (PMEAC) sharply lowered its growth forecast for the current fiscal to 5.3% from 6.4% projected earlier. Trade took a turn for the worst after a report by the Prime Minister's economic panel suggested it would be a challenge for the government to meet its fiscal deficit target of 4.8% of GDP in the current year. Further, fall in rupee against the dollar also aided pessimism to the markets. The rupee traded at Rs 63.70 at the time of equity markets closing, as compared to its previous close of Rs 63.54 per dollar. Global cues too remained sluggish as European markets traded in the red in early deals, while most of the Asian equity indices ended in the red. Back home, sentiments got some support after shares of most of the sugar companies edged higher in trades in an otherwise choppy market after the food minister K V Thomas asked sugar mills to focus on exports. Food Minister said, sugar mills should focus on exports to clear payment of dues to cane farmers as the country's output of the sweetener is likely to exceed domestic demand for the fourth consecutive marketing year. Additionally, shares of India’s aviation companies viz, Spicejet and Jet Air India edged higher on the back of air fare hikes. SpiceJet pioneered the hike in fares this season and was followed by other entities, listed as well as non-listed, in the range of 25-30%. Finally, the BSE Sensex lost 49.12 points or 0.25% to settle at 19732.76, while the CNX Nifty ended tad lower by 0.10 points to 5,850.60.