Indian shares are likely to kick start the trading week on a positive note as investors bet on an interest rate cut on June 2 by the Reserve Bank of India (RBI) to offer a further boost to Asia’s third biggest economy, bolstering the appeal of risky assets. A fifth straight drop in exports in the month of April, coupled with easing inflation, a slowdown in industrial output growth and progress on fiscal consolidation has raised the odds of a third interest rate cut this year, happening in the near-term. The country’s exports slid fell 14 per in April 2015 as the trade gap widened to USD 11 billion from USD 10 billion a year ago, amidst a global slowdown. Meanwhile, the government contained its fiscal shortfall at 4 per cent of 2014-15 GDP, beating its 4.1 per cent target, leaving more room for the central bank to press the monetary easing button. Further, a slowdown in selling by foreign institutional investors amid the relative calm in European bond markets and speculation of the US Federal Reserve pushing back the timeline of a maiden interest rate lift-off since 2006 as the world’s biggest economy continues to slow, will also bolster Indian equities. Investors will eye the minutes of the US Fed’s latest meet, to be unveiled on Wednesday, and which may drop fresh hints over the timing of monetary tightening in the US. Traders will focus on quarterly earnings numbers from the likes of SBI, Coal India, Tata Steel and Bajaj Auto this week. Positive trade in the SGX CNX Nifty Index futures for May delivery which climbed 0.07 per cent to 8,274 at 10:26 am in Singapore, signals a gap up opening at Dalal Street on Monday. However, Asian markets were trading mixed as Chinese shares dropped as average home prices in China’s 70 major cities fell for the eighth straight month in April 2015, year on year, while Japanese shares climbed on prospects of a delayed US interest rate hike after US consumer confidence plunged in May while industrial output fell for the fifth month on the trot in April. Wall Street closed mostly higher on Friday as tepid data bolstered the case for continuation of accommodative monetary policy by the Fed. US industrial output fell 0.3 per cent in April 2015 from the previous month as manufacturing output stalled while the gauge measuring consumer confidence declined to the lowest level since October at 88.6 in May from 95.9 in the previous month.
