Economic data pointers keep markets afloat

The Indian equity benchmarks erased a major chunk of gains in the dying hour of trade to come off their intraday high points. However,. they managed to close the session with moderate gains.

The markets remained positive for the most part of the day, as street took cues from the reports of the government further creating a special financial scheme for 10 industry segments, which are import-driven for the MSME sector, in addition to the flurry of sops that were given to various industries after the budget. The MSME sector plays a crucial role in achieving the center's target of making the country a US$5 trillion economy.

The markets, which saw a flattish trend after Moody’s Investors Services cut their forecast for India’s 2019 (calendar) GDP growth by 60 bps to 5.6%, in what reflected a continuing trend of such downward revisions by prominent domestic and foreign agencies, during the past week. On the economic data front, the headline inflation is bound to rise further to 5 per cent for November but, despite the pinch in price rise, the Reserve Bank will go for two consecutive rate cuts on growth concerns. Some pessimism also spread among investors, with SBI research’s report showing that surplus rainfall in August and September is likely to keep food and vegetable prices elevated in the near future and the retail inflation may average at around 4 per cent in FY20.

Going forward, the markets may continue to remain sideways. The earnings season has come up with few surprises. Hence, one can expect the sentiment to remain positive.