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Markets likely to make cautious start on Thursday
Apr-18-2019

Continuing their winning streak for fourth straight session, Indian markets settled at record highs on Tuesday, with gains of around a percent each, on strong global cues and domestic macro data. Indian financial markets remained closed on Wednesday on account of Mahavir Jayanti. Today, the start of the session is likely to be cautious amid subdued global cues. Investors are looking ahead to the second phase of polling for 2019 Lok Sabha elections starts on April 18. Some cautiousness will come with Niti Aayog CEO Amitabh Kant’s statement that India has been growing at more than 7 per cent rate and this could not have been achieved without adequate job creation. Kant said that India needs to accelerate its growth rate from 7 per cent to 10 per cent. However, some respite may come later in the day with report that investments through participatory notes in domestic capital market rose to Rs 78,110 crore at the end of March, amid positive market sentiments. As per the latest Sebi data, the total value of P-note investments in Indian markets -- equity, debt, and derivatives -- stood at Rs 78,110 crore till March-end. Some support may also come with report that the issuances of government-fully serviced bonds (GoI-FSBs) rose to Rs 64,192 crore in the year ended March 2019 as compared to Rs 15,095 crore during the last fiscal. These borrowings are estimated to have accounted for 0.34 percent of GDP for FY19 as compared to 0.09 percent of GDP for FY18. Meanwhile, the commerce ministry has laid down a procedure for import of a few varieties of pulses for the current fiscal and has invited applications from millers. According to the ministry's foreign trade arm DGFT, millers and refiners of these pulses need licence for imports. There will be some buzz in the FMCG sector stocks with a report that the fast-moving consumer goods industry is likely to grow at a slower pace of 11-12 percent in 2019, almost 2 percentage points lower than in 2018, primarily driven by the steeply falling rural demand due to the lingering farm distress. There will be some reaction in steel industry stocks with the World Steel Association report that steel demand in India is expected to grow above 7 per cent in the current as well as next year. It added that in 2020, the demand is projected to grow 1 per cent to 1,752 MT. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended marginally lower on Wednesday as the health-care sector slumped on concerns over potential adverse impact from future policy changes. Asian markets are trading mostly lower on Thursday after a negative performance on Wall Street, with caution ahead of business surveys in Europe and Japan, and the Good Friday and Easter holidays keeping investors on the sidelines.

Back home, rally continued on Dalal Street on Tuesday, with Sensex and Nifty settling at fresh record closing high levels. After a fabulous start, key indices remained under grip of bulls throughout the session, as the India Meteorological Department (IMD) in Long Range Forecast for 2019 southwest monsoon rainfall stated that the country is likely to have 'near normal' monsoon this year with a well distributed rainfall which could be beneficial for the agriculture sector. Adding enthusiasm among traders, India’s merchandise exports rose to a five-month high of 11.02 percent in March 2019 as compared to same period of last year, on account of higher growth mainly in pharma, chemicals and engineering sectors. Market participants also took encouragement with a private report stating that the Reserve Bank of India will cut its key policy rates by another 25 basis points, after Governor Shaktikanta Das' weekend speech focusing on ways to revive growth. Markets remained strong during second half of the session, buoyed with Finance Minister Arun Jaitley’s statement that fast economic growth and rapid urbanisation would slash the number of people in extreme poverty by 2021 and it will completely be ended in the decade after that. The Minister also said the number of people who live in poverty will drop to below 15% in the next three years and to a negligible level in the 10 years after that. The street was also positive with a report that the government’s war on Non-Performing Assets could give a boost of 60 basis points to India’s GDP in FY20. The measures taken by the Modi government including recovery of bad loans and bank recapitalisation will reduce costs for lenders. Meanwhile, the government is targeting public procurement worth Rs 50,000 crore through the commerce ministry's online marketplace--Government e-Marketplace (GeM)--during the current financial year (2019-20). In FY19, GeM touched Rs 17,325 crore mark in terms of value of transactions as compared to Rs 5,885 crore in the previous financial year and Rs 422 crore in 2016-17. Finally, the BSE Sensex gained 369.80 points or 0.95% to 39,275.64, while the CNX Nifty was up by 96.80 points or 0.83% to 11,787.15.
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