Markets to extend gains on good macro data

The Indian markets sensing some good and bucking the global trend, recovered from their lows to end modestly higher in last session. Today, the start is likely to be in green on supportive global cues and on better than expected macro data announced after the market hours. The index of industrial production (IIP) in January stood at positive 0.1 percent, highest since September 2013, against an expectation of continued contraction. Meanwhile, the consumer price index (CPI) for February slowed to 8.10 percent from 8.79 percent in January, its lowest level since January 2012. The numbers may give some cheers to the rate sensitives’ as the CPI numbers will guide the RBI policy on April 1. However, there will be some cautiousness too in the market, as the Securities and Exchange Board of India (SEBI) has tightened norms to prevent money laundering through the capital market and has asked capital market entities to conduct a detailed risk assessment of their clients, including those linked to countries facing international sanctions. Aviation stocks too may see some action, as the Federation of Indian Chambers of Commerce and Industry (FICCI), has suggested that the Centre should take up with the States the need to reduce VAT on aviation turbine fuel to bring down the high operating costs of airlines.

The US markets despite recovering from their initial fall managed a flat close in last session. Amid global sell-off concerns about China and Ukraine weighed on Wall Street at the open, traders seemed reluctant to make any significant moves amid another quiet day on the US economic data front. The Asian markets have made a green start ahead of the Chinese factory data release. Though, China is projected to report slower growth in industrial output.

Back home, After taking a respite in the last session, Indian equity markets resumed their northbound journey on Wednesday. However, what looked as splendid session in morning deals, turned out to be merely a flat one with positive bias at last, as investors opted to remain on the sidelines ahead of Index of Industrial Production (IIP) data for January and Consumer Price Index (CPI) data for the month of February, scheduled to be released after markets hour. While IIP is likely to extend its contraction of -0.6 per cent in December to -1.10 per cent in January, consumer price inflation (CPI) is likely to ease at 8.10 per cent in February, as compared to 8.79 per cent registered in the month of January. After a sluggish opening, markets regained their lost ground and started moving northward with consistent buying from foreign institutional investors (FIIs) in the past several sessions supported the sentiments. However, gains on the up-side remained capped and sentiments remained dampened as traders stayed concerned with India’s merchandise exports falling for the first time in eight months and set to miss its export target for the fiscal with exports moving into the negative zone in February 2014. Global cues too remained sluggish with European markets making a dismal opening with CAC, DAX and FTSE all trading with deep cut in early deals, while all the Asian equity markets ended the session in negative terrain. Back home, stocks related to metal counter continued to end lower for third day in a row after latest data showed China’s exports slumped in February 2014. On the flip side, defensive sectors were among the top sectoral gainers on the BSE with FMCG and Healthcare indices ending over 1.20 percent each followed by Consumer Durables. Software and Technology counters too added gains of around half a percent on rupee weakness. Finally, the BSE Sensex gained 29.80 points or 0.14%, to settle at 21856.22, while the CNX Nifty added 5.00 points or 0.08% to settle at 6,516.90.