HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Markets likely to make pessimistic start
Oct-19-2018

Snapping three-session gaining streak, Indian markets wiped out all of their early gains to end Wednesday’s trade near intra-day low level amid a massive sell-off in financial stocks on liquidity concerns. Today, the markets are likely to make pessimistic start on weak global cues. There will be some cautiousness with SBI’s research report - Ecowrap stating that the rupee depreciation has neither helped in improving exports nor in slowing imports, leading to an incremental trade deficit of $4 billion in the first half of the current fiscal. Traders will also be concerned about a private report that the impact of the current tightness in the credit market is unlikely to impact economic growth in any meaningful way beyond the next two quarters, notwithstanding the cautious view on the domestic equity market. Traders may react to a report that even as India clocked a good growth of 6.7% in the financial year 2018-19, job creation by corporate India dropped to just 3.8%, which can be seen as confirming fears of jobless growth in the country. Meanwhile, the commerce ministry is working on a new World Trade Organisation (WTO)-compliant export incentive scheme for merchandise shipments to replace the existing Merchandise Exports from India Scheme (MEIS). Currently, exporters of goods avail incentives under the MEIS. In this, the government provides duty benefits depending on product and country. There will be some buzz in gems and jewellery sector related stocks with report that the government is expected to come out with a comprehensive gold policy soon to promote the metal industry and the gems and jewellery sector, which is a major contributor to the export basket. The policy also aims at creating jobs in the gold sector. There will be some reaction in steel sector stocks with Union Minister Birender Singh’s statement that the government has no plans to scale down its target for steel production unlike other countries as consumption of the alloy in India is growing slower than expected.

The US markets ended sharply lower on Thursday, on worries about global growth and as investors continued to weigh minutes of the Federal Reserve’s September meeting, which were viewed as hawkish. Asian markets were trading in red on Friday as global trade worries, higher US interest rates and growth concerns in China are likely to weigh on investors’ risk appetite.

Back home, a huge reversal in gaining trend seen on the markets on Wednesday, as both the larger peers, Sensex and Nifty halted three-day winning streak to settle the session on pessimistic note. The markets made a firm opening, as the World Economic Forum (WEF) in its latest Global Competitiveness Report for 2018 ranked India the 58th most competitive economy. As per the report, India's rank rose by five places from 2017, the largest gain among G20 economies. Traders’ sentiments got boost with the Reserve Bank of India’s (RBI) forecast that the share of investments in gross domestic product (GDP) will rise to 33% by FY23 from 31.4% recorded in the last fiscal, suggesting that the upturn in the current investment cycle that started in FY17 could last for five more years. Some support also came after a latest commerce ministry study showed that the extra US tariffs on its imports from China in the ongoing trade war have opened a window of opportunity for India to push for higher exports in 171 items - ranging from textiles to marine products - with additional outbound shipment potential of up to $8.7 billion a year. However, in the second half of the session, the key indices gave up all of their gains to enter into red terrain, amid sharp sell-off by traders. The trade was also got hit by reports that the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) hit a nearly nine-and-a-half year low of Rs 79,548 crore in September 2018. Adding some anxiety among the investors, Commerce and industry minister Suresh Prabhu said that India is the ‘worst sufferer’ of declining trade and slow global economic growth as the country has a huge stake and its share in world trade is rising. Some cautiousness also came after Niti Aayog CEO Amitabh Kant said that the country needs to work a lot on exports and gender parity so as to grow at 9-10% annually in the next three decades, ensuring that India has growth with equity. Separately, Finance Minister Arun Jaitley has said that India needs strong and decisive leadership at the Centre to promote growth, get rid of poverty and transform the country into a developed nation. Finally, the BSE Sensex plunged 382.90 points or 1.09% to 34,779.58, while the CNX Nifty was down by 131.70 points or 1.24% to 10,453.05.
  RELATED NEWS >>
Most Viewed >>
April 22 , 2024
Invest lumpsum through systematic transfer pla
April 24 , 2024
Fund managers trim PSB exposure, see better va
April 22 , 2024
FPIs mount bearish bets as risk aversion grows
April 22 , 2024
FPIs withdraw over Rs 5,200 crore in April so
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.