Double Delight For Indian Equities

Indian equity markets witnessed a double delight yesterday as IIP and CPI data came in better than the street estimates. While the IIP for the month of September showed a growth of 2.5% as against the 0.40% in August 2014, the CPI inflation for the month of October declined to just 5.52 per cent. As we had stated in our market commentary yesterday the IIP was estimated at less than 1% and CPI inflation was estimated in the range of 5.8to 5.9%.With this double delight the equity indices are likely to witness another smart up move. Yesterday the benchmark indices moved further northwards and the Sensex closed at all time high levels of 28008 (up 99 points) and Nifty closed at 8383 (Up 21 points).

As we move ahead we feel the Indian equities are likely to continue the march ahead with positive cues on global front as well. Though the Dow and S&P halted the consistent streak of up-move, the macro economic data points from the US markets are positive. On the domestic front, while there has been double delight on IIP and CPI inflation numbers, the results season has also been in-line with street Estimates. There are hardly any downgrades that have happened and most on the street are expecting the H2FY15 to be good for India Inc.

Another advantage for India Inc is the falling crude prices. The Crude is now trading below the USD 80 per barrel mark. With India being a net importer, this bodes well for India Inc as many Crude derivatives raw material prices would see a decline, helping India Inc put up a better show at bottomline.

As regards the US markets Bloomberg reported that, the S&P 500 Index halted a five-day rally, while small-cap shares rose to the highest level since July, as gains among phone and consumer stocks offset losses in utilities and growing concern over slowing growth in Europe. The S&P 500 lost 0.1 % to close the day at 2,038.21. The Dow also declined 2.89 points, or less than 0.1 %, to 17,612.01. Experts suggest that, after a consistent up-move it is a healthy consolidation happening.

Asian markets are showing mixed trends with gains in Nikkei standing at 0.26% but Hang Declining by 0.08%. Shanghai Composite is trading with gains of 0.10% ahead of macro-economic data announcement in China. Bloomberg suggested that – China’s retail sales probably expanded 11.6 % in October from a year earlier, a pace unchanged from September, according to economists surveyed by Bloomberg before today’s data. Factory output in China grew 8 % from a year earlier, also steady from the previous month, another survey showed. SGX Nifty is also trading with gains of 15 points (up 0.20%).  

Today we expect the Indian equity indices to open on a positive note. With double delight on the IIP and CPI front a good amount of retail buying is expected in rate sensitive sectors like banks, realty, Infrastructure and capital goods. We again maintain our stance about mid Cap and small cap continuing the out-performance against benchmark indices.