Markets to extend jubilation; IIP and CPI data eyed

The Indian markets made a smart bounce back in last session and surged by over half a percent riding on the bull run in the global markets. Today, the start is likely to remain cheerful and traders will be getting additional support with expected good numbers of IIP and CPI. IIP data for June is expected to be strong in the final month of the quarter as indicated by good core sector data. Also, Paris-based think tank Organisation for Economic Cooperation and Development (OECD) has said that India’s economic growth is gaining momentum and the country is poised for better growth. Meanwhile, Finance Minister Arun Jaitley has said that Rs 6.23 lakh crore indirect taxes collection target for the current fiscal is a challenging one but efforts are on to achieve the same by taking steps to boost growth. There will be some action in gold related stocks, as Commerce and industry minister Nirmala Sitharaman has pitched for relaxing import curbs on gold amidst rising smuggling of the precious metal. There will be some buzz in the power sector stocks too, as the government has said that, as many as 29 hydro power projects with an overall capacity of 10,000 MW are awaiting appraisal from the Central Water Commission.

There will be lots of important result announcements to keep the markets in action. Aditya Birla Nuvo, BEML, BHEL, BPCL, Britannia Inds, Coal India, Educomp Sol, Essar Oil, IFCI, Merck and MOIL are among many to announce their numbers.

The US markets strengthened a bit more on Monday, making a good start of the week. Though, there was no major economic announcements but sentiments bolstered on the hopes that geopolitical tensions are easing and some dovish comments from a Fed official. The Asian markets have made mostly a positive start amid speculation the arrival of a Red Cross aid mission in eastern Ukraine may ease tensions.

Back home, buoyed by firm global cues, Indian equity benchmarks ended the Monday’s trade with a gain of around three fourth of a percent, snapping three days consecutive fall. Frontline indices not only ended the session near intraday high levels but also recaptured their crucial 7,600 (Nifty) and 25,500 (Sensex) bastions as investors took to hefty across the board buying. Easing Geo-political concerns after news suggested that Russia was ending military drills near the Ukrainian border and signs of truce in Gaza, mainly honed investors’ risk appetite across the globe. Sentiments remained jubilant since beginning after Confederation of Indian Industry (CII) stated that green shoots have started to appear in the manufacturing sector, with a majority of segments likely to post higher output. Buying got intensified in last leg of trade on report from weather department suggesting that monsoon season is likely to end with just 10% below average rain, from the abysmal 40% predicted during the month of June. Notably, the gains of local barometer gauges came in run-up to Industrial production data, which is scheduled to be released on Tuesday i.e. August 12. Factory output in June rose 5.4% from a year earlier, faster than the 4.7% growth in May. Supportive cues from US markets provided the much needed support to local markets, while positive closing in Asian markets too supported the sentiments. Back home, there was broad based buying witnessed in the markets and apart from the blue chips, the broader markets too equally participated in the rally. Rally in auto counter too aided sentiments post robust earnings during the June quarter and encouraging sales growth during July. Moreover, M&M surged over 6% on expectation of agri machinery sector would get strong booster over next 2-3 years as better prospects of agriculture sector supported by number of government aids and more focus on rural economy by new government. Meanwhile, shares of real estate companies remained on buyers’ radar after the Securities and Exchange Board of India (Sebi) approved the setting up and listing of Real Estate and Infrastructure Investment Trusts, commonly referred to as REITs. Additionally, public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC edged higher on reports that the Union Government will pay Rs 11000-crore subsidy to PSU OMCs for Q1 June 2014. Finally, the BSE Sensex surged by 190.10 points or 0.75%, to 25519.24, while the CNX Nifty soared by 57.40 points or 0.76% to 7,625.95.