Watch out for IIP Data

Announcement of IIP numbers are likely to have a significant impact on the market today. Despite several negative triggers from the global arena over the past few weeks, our markets have managed to hold on to important support levels and come very close to a break out of the trading range where it has been locked for the last couple of months. Street is expecting a 12.5% growth in index over the same period last year. Though this number seems stunning yet we must keep in mind the low base effect. Last year at this time Industrial and Economic activity had slipped on the back of the global financial crisis. Hence the absolute growth numbers are likely to look stunning and may not reveal the true picture. What will be keenly observed is whether Capital Goods and Infrastructure, segments which have somewhat lagged in the last few months of otherwise good IIP numbers, also shows encouraging trends. 

Also since the expectation is anyway on the higher side only a blockbuster performance can be the trigger which will pull the markets above the present trading range. Infrastructure and Capital Good stocks have somewhat underperformed the markets in the recent past. Traders may like to build long positions in stocks like L&T, BHEL and JP Associates with an appropriate stop loss before the policy announcements. A positive surprise on the IIP numbers and a possible rejuvenation in the domestic infrastructure growth numbers could push these stocks into a new orbit.