Global Manufacturing Data Upbeat; Will The Markets Gain?

The markets were gripped by fears of tapering of quantitative easing and a slowdown in China. Considering this, we expected gains on the Indian markets to see some friction, which happened at the beginning of the trading session yesterday. However, the markets picked up as manufacturing data from developed countries showed signs of revival.

Indian equity markets were bolstered by positive global and domestic macroeconomic cues. The trend is likely to continue as global markets saw considerable gains. But are domestic cues supportive of this prospective up-move?

In the US, The Institute of Supply Management’s index rose to 50.9% in June from 49.0% in May. This shows a rebound as a rise is being seen after three months of decline. Any number above 50% shows expansion in business.

In Europe, the final reading of the euro-zone manufacturing Purchasing Managers’ Index (PMI) came to 48.8 in
June, touching a 16-month high and rising from the preliminary reading of 48.7.

The positive manufacturing data led to gains in the US markets ranging between 0.44% and 0.92% and in European markets between 0.31% and 1.49%.

Global cues definitely signal a positive day ahead. However, domestically the picture is a little dark. Growth in eight infrastructure industries slowed to 2.3% in May, due to contraction in crude oil, natural gas, coal and fertiliser output, from an expansion of 7.2% in the corresponding period in the previous year. This marks a considerable slowdown and is likely to weigh on the markets today.