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Indian markets surged to three-month closing highs and ended higher on Monday led by financial and IT shares, building on gains in the past four consecutive sessions. Today, the markets are likely to get a cautious start amid mixed Asian cues. Weak inflation data likely to dampen sentiments in the markets. Data released by the Ministry of Statistics and Programme Implementation showed that India's retail inflation in February rate rose to an eight-month high of 6.07 percent from 6.01 percent in the previous month, remaining above the upper limit of the central bank’s comfort level of 6 per cent for the second consecutive month. Inflation based on the Consumer Price Index (CPI) was 5.03 percent in February 2021. Traders will be concerned as SBI forecast more pain for the rupee if the ongoing Ukraine war lingers, plumbing to a new low of 77.5 to a dollar by June and marginally improving to 77 by end-December. It also said the current account deficit (CAD) will be at 3.5 per cent if crude oil trades at $130 a barrel, pulling down growth to 7.1 per cent. Some pessimism may come with an another report by the Ministry of Statistics and Programme Implementation showing that India's urban unemployment rate jumped to 12.6 percent in April-June 2021 from 9.3 percent in the previous quarter. There will be some buzz in banking stocks with report that bank frauds over the last five years have come down drastically to Rs 648 crore in first nine months of 2021-22, on the back of structural and procedural reforms to check such incidents. Besides, foreign institutional investors (FIIs) continue selling in India as they have net sold shares worth Rs 176.52 crore on March 14, the lowest offloading in a single day in the last one month. Housing finance companies stocks will be in focus as rating agency ICRA said the finance companies and housing finance companies would require Rs 1.8-2.2 trillion of incremental fresh funding to meet its growth requirement in FY23 while maintaining the liquidity buffers. There will be some reaction in real estate industry stocks as the government widened the meaning of Real estate business under the foreign direct investment (FDI) policy which now includes dealing in land and immovable property to earn profit. Edible oil industry stocks will be in limelight as industry body SEA said India's edible oil imports rose 23 per cent to 9,83,608 tonnes in February mainly due to a sharp rise in shipments of refined palm oil.

The US markets ended mostly lower on Monday as investors lightened positions in tech and high growth stocks ahead of the expected US Fed rate hike on Wednesday. Asian markets are trading mixed on Tuesday following the release of Chinese economic data that was far above expectations.

Back home, Indian equity benchmarks extended their gains to the fifth consecutive session and ended with gains of over one and half percent on Monday, led by gains in Banking, IT, TECK and Finance shares, shrugging off weakness across most global markets. The start of the day was positive, aided by Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that prudent budget assumptions for FY23 will ensure that the macro-fundamentals will be able to hold-up in the near-term amid heightened concerns over the impact of the Russian invasion of Ukraine on the Indian economy. Buying also crept in as India’s factory production measured in Index of Industrial Production (IIP) expanded by 1.3 per cent on an annual basis in January 2022 on account of better performance by mining and manufacturing sectors, though capital goods segment remained in contraction mode.  Some support also came as India's foreign exchange (forex) reserves rose by $394 million to $631.92 billion in the week ended March 4 led by a sharp jump in foreign currency assets. The forex reserves had declined by $1.425 billion in the previous week. Domestic sentiments remained upbeat throughout the day, taking support from Fitch Ratings’ report that strengthening economic recovery and stable financial metrics will help state-owned banks have stable earnings during the next financial year, aided by the gradual unwinding of regulatory forbearance through the year. It also said private sector banks are better placed to reap the benefits of recovery and will continue to increase their market share both in credit as well as deposits. Adding optimism among the market participants, India’s merchandise exports rose 25.10 per cent to $34.57 billion in February 2022 as compared to $27.63 billion in February 2021, on account of healthy growth in sectors like engineering, petroleum and chemicals. Traders shrugged off report stating that wholesale price-based inflation grew at 13.11 per cent in February as food prices hardened. The high rate of inflation in February, 2022 is primarily due to rise in prices of mineral oils, basic metals, chemicals and chemical products, crude petroleum & natural gas, food articles and non-food articles etc. as compared to the corresponding month of the previous year. Finally, the BSE Sensex rose 935.72 points or 1.68% to 56,486.02 and the CNX Nifty was up by 240.85 points or 1.45% to 16,871.30.   

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