Markets may open with a dip due to deep cut in IIP

Indian equities market succumbed to selling pressure on Tuesday attributed to the caution, ahead of key macroeconomic data; and quarterly numbers of IT major TCS. Sentiment was already weak on concerns over China’s growth, as also the continuously falling crude prices touching a 12-year low. The Sensex closed 143 points or 0.6% lower at 24,682; and Nifty declined 53 points or 0.7% to settle at 7,510 on account of selling in Banking, IT and Oil & Gas stocks. Meanwhile, the broader markets underperformed, and the benchmarks with BSE Midcap and Smallcap indices fell around 1% each. The rupee dropped for the second consecutive day by 5 paise, to settle at 66.86 per dollar, owing to persistent dollar demand from importers a midst a fall in equity market.

Industrial output for the month of November 2015 contracted by 3.2 per cent, recording lowest level for FY16. This can be attributed to poor performance by the manufacturing sector and dip in the output of capital. The IIP showed growth of 5.2 per cent in November 2014. The Consumer Price Index (CPI) for the fifth consecutive month rose to a high of 5.61 per cent in December, from 5.41 per cent in November 2015 due to high food inflation.

U.S. stocks moved broadly higher on Tuesday. The rally was led by technology stocks that pushed the market to a modest gain. The Dow Jones industrial average gained 117.65 points, or 0.7%, to 16,516.22. The S&P 500 index added 15.01 points, or 0.8%, to 1,938.68. The Nasdaq composite climbed 47.93 points, or 1%, to 4,685.92.

Oil plunged below USD 30 a barrel in intraday on Tuesday for the first time since December 2003. WTI crude oil declined 3% during the day to settle at USD 30.44 a barrel. Brent crude fell nearly 4% to USD 30.34 a barrel, extending losses over the first seven trading sessions of 2016 to 18.6%.

European stocks finished higher Tuesday, bouncing back from a four-session losing streak. The Stoxx Europe 600 index gained 0.9% to end at 343.22. Germany’s DAX 30 index rallied 1.5% to end at 9,985.43. France’s CAC 40 index rose 1.6% to close at 4,378.75, while the UK FTSE 100 index added 1% to finish at 5,929.24.

Asian stock markets have rebounded on early Wednesday following a positive lead from Wall Street. Oil was held above USD 30 a barrel before U.S. supplied adequate data. Japan's Nikkei 225 bounced 2.6% from a near one year low, while South Korea’s Kospi index was up by 1.51%. Australia’s S&P/ASX 200 Index gained 1.16%; and New Zealand’s S&P/NZX 50 Index advanced 0.48%. Shanghai Composite index has edged up by 0.71%.

While on domestic front, A SGX Nifty 50 index future for January Series traded down 48 points at 7,537. Indian markets may open in the negative based on poor IIP numbers and high CPI.