Expect A Flat Opening With Positive Bias

Indian markets yesterday remained range bound ahead of the crucial data announcements. Yes we are talking about the Index of Industrial Production (IIP) for the month of January 2014 and Consumer Price Index (CPI) for the month of February 2014. Though we had stated in the past that the data pertains to the past events and as the markets participants are looking ahead to the elections, the announcement of data would not make much of an impact on the Indian equity markets.

However it is an important data point and hence certain reaction is surely expected form the markets. Hence it is important to understand what impact these Data points would make on the markets. If we consider the IIP numbers, after the three quarters the IIP has showed positive growth. But the Growth has been minuscule with just 0.10% YoY growth for the January 2014 month. Though there has been marginal improvement in the IIP after three months, we feel the numbers are still disappointing as the manufacturing has contracted by more than 4%. This is a worrisome factor. It is the electricity and mining which helped the General IIP move upwards marginally.  There has been disappointment on the Capital goods front as well. A lot was expected in the capital good segment ahead of the elections and few larger projects getting some momentum.

While the IIP numbers were not good enough, CPI figure has provided certain relief. The CPI for the month of February 2014 increased by 8.10% which is lower as compared to 8.79 % in January 2014. This May now provide some scope to RBI to take a dovish stance on the liquidity front. This very fact may help the Indian markets witness some amount of positive movement today in the initial part of the trading session.

While this was the story on the domestic front, there are hardly any triggers at the global level. The only major announcement awaited today is about the industrial production data of China which is expected today. Apart from that there is hardly any other announcement expected on the global front. On the China Data the experts suggested that, any disappointment in this reading will only compound China fears and could be detrimental to risk heading into the end of the week. We also second the thought.

As regards the performance of the Indices the Dow witnessed a marginal decline to close at 16340 (Down 0.07%). The S&P closed marginally in green with gains of 0.03%. The Asian Indices are also trading with marginal gains as the Nikkei is trading in green (Up 0.10%). Similar is the Story with Shanghai Composite and Hang Seng. We fee ahead of the Chinese industrial data announcement not much would happen on the global canvas. 

The SGX Nifty is also trading with marginal gains of 0.08% (trading at 6558). We expect a sort of flat opening for the markets with positive bias.