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Sensex and Nifty likely to open in red territory
Dec-18-2018

Indian benchmark indices extended their winning streak for fifth straight session and ended higher on Monday with falling oil prices, a strengthening rupee, and reports of improving investment climate in the country also boosted investor sentiment. Today, the markets are likely to make pessimistic start on weak global cues amid lingering concerns about global economic growth. Traders will be concerned about S&P Global Ratings’ statement the increasing involvement of the government in the affairs of the Reserve Bank of India (RBI) could undermine the hard-fought improvements in the banking system over the past few years. It termed the exit of Urjit Patel as credit negative. There will be some cautiousness as Former RBI Governor Raghuram Rajan cautioned that transfer of excess reserve to the government may bring down rating of the central bank. Rating downgrade of the RBI from ‘AAA’ would make borrowing costlier for the central bank and will have implication for the entire economy. Also, there will be negative reaction as engineering exporters’ body EEPC India said exporters are facing the threat of losing refunds and a possible action by the Enforcement Directorate as banks are not issuing remittance receipts despite submission of required documents. However, traders may take some support later in the day with the Export Import Bank of India’s (Exim Bank) statement that the country’s export growth will surge to 7% for the October-December quarter. The Exim Bank estimate said merchandise exports will go up to $82.39 billion for the third quarter of the fiscal year, as against $77 billion. Some encouragement may also come with the Ministry of Commerce’s data showing that Foreign Direct Investment (FDI) has increased constantly from $45.15 billion in 2014-15 to $60.97 billion in 2017-18. Meanwhile, the Corporate Affairs Ministry plans to amend the rules for incorporation of companies as part of efforts to provide more clarity on norms related to availability of names. Moreover, regulator SEBI put in place a more robust risk management framework with regard to margin system for the equity derivatives segment. There will be some buzz in the e-commerce sector related stocks with report that the National Association of Software and Services Companies (NASSCOM) Strategic Review 2018, in the Information Technology and Business Process Management (IT-BPM) sector in India, said that the Indian e-commerce market grew 17% to $38.5 billion in the financial year 2018-19.

The US markets ended sharply lower on Monday as investors worried about the health of the global economy ahead of the final policy meeting of the Federal Reserve this year. Asian markets were trading in red on Tuesday following sell-off on Wall Street. Besides, investors are keeping a close watch on a major speech by Chinese President Xi Jinping.

Back home, Monday turned out to be Marvelous day for the Indian equity benchmarks, as Sensex and Nifty ended the trading day in green for fifth straight session. The key indices made a great start of the week, aided by commerce ministry’s latest data report showing that India’s exports grew by a meager 0.80% to $26.5 billion in November, even as the trade deficit widened to $16.67 billion. Exporters attributed the marginal export growth in November to high base effect, as the foreign shipments in the comparable month of the previous fiscal were quite high at $26.29 billion. Besides, imports rose by 4.31% to $43.17 billion during the month. Adding some enthusiasm, the Finance Minister Arun Jaitley said that the government will stick to the 3.3% fiscal deficit target in the current financial year. He also said India will clock a growth rate of 7-8% despite global uncertainties and will retain the tag of the world’s fastest growing major economy. Some comfort also came with deputy governor Viral Acharya’s statement that the Reserve Bank prefers fundamental changes to smoothen loan flow to micro-businesses through a public credit registry, rather than doling out forbearances.  Rally continued on the street in late noon deals, as traders took encouragement with credit rating agency, Care Ratings’ latest report stating that the investment climate in India has improved amid factors like improved gross fixed capital formation and higher government expenditure. It also highlighted rising government’s spending in the sectors like infrastructure, housing and defence. Domestic sentiments also got boost, with the Electronics and IT Minister Ravi Shankar Prasad’s statement that the Indian government will focus on manufacturing of medical electronics, defence electronics and scaling up the manufacturing capacity of automobile electronics, as part of its plan to grow Indian digital economy to $1trillion. Traders paid no heed towards a report showing that as many as 369 infrastructure projects, each worth Rs 150 crore or above, have shown cost overruns to the tune of over Rs 3.58 lakh crore owing to delays and other reasons. Finally, the BSE Sensex surged 307.14 points or 0.85% to 36,270.07, while the CNX Nifty was up by 82.90 points or 0.77% to 10,888.35.
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