Markets to get a flat start; earnings announcements to give direction

The Indian markets after a choppy day of trade ended modestly in red in last session. Today, the start is likely to be flat and some strength can be seen in the latter part of the trade, though traders will be eyeing some important result announcements to get further cues. There will be some support with government’s decision of relaxing FDI norms for NRIs, PIOs, OCI. Government has decided that non-repatriable investments by NRIs, OCIs and PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps. Also, the Reserve Bank of India has trebled the limit on trade-linked remittances to Rs 15 lakh from the earlier Rs 5 lakh. It has also allowed overseas banks to enter into swaps with other overseas banks besides domestic banks to facilitate disbursals of rupee loans by overseas lenders. There will be some buzz in the retail stocks, as the Union Minister Nirmala Sitharaman has said that the government will consider repealing the 51 percent FDI policy in multi-brand retail, while no proposal would be entertained for opening supermarkets in India by foreign players.

The US markets made mostly a positive close in last session, with S&P 500 surging to new record highs. There were mixed set of economic data, while the National Association of Realtors reported an unexpected drop in existing home sales in the month of April, the Conference Board’s index of leading economic indicators rose by much more than expected in April. The Asian markets have made mostly a positive start, as mixed US economic data fueled bets the Federal Reserve won’t rush to raise interest rates in June. Chinese markets are continuing their rally mood with another good start.

Back home, Indian equity benchmarks ended the volatile day of trade with modest cut on Thursday as investors opted to book some of their profit after previous session’s rally. Also, investors remained on sidelines ahead of earning numbers of blue-chips including ITC and SBI due tomorrow. Moreover, marketmen were unable to get any respite with the government constituting committee on MAT issue headed by Justice A.P. Shah, with other members Dr. Girish Ahuja and Dr. Ashok Lahiri. To begin with, the Committee will examine the matter relating to levy of MAT on FIIs for the period prior to April 01, 2015. However, losses remained capped as some encouragement came with Reserve Bank of India Governor Raghuram Rajan’s statement that government has taken steps to propel growth. He also said that investors’ unhappiness over the taxation issues could have been avoided, but once raised, they have to go through a legal process which is on. Meanwhile, Finance Minister Arun Jaitley has said that inflation will not be a significant challenge though there is a possibility of below average monsoon and food prices getting impacted. Moreover, Jaitley added, “steps taken by the government has kept food prices low and pro-active government will always keep food prices low”. On the global front, European markets traded mostly in the negative terrain, while Asian markets closed mixed. Back home, selling in metal counter too dampened the sentiments after a preliminary Chinese factory gauge missed the estimates and came in at 49.1, raising demand concern from the second largest consumer of metals. Stocks related to FMCG space too edged lower after reports suggested that El Nino conditions in the tropical Pacific region were likely to strengthen, according to Australian Bureau of Meteorology, which closely tracks weather in the region. Additionally, select stocks from software counter ended in red on the back of an appreciating rupee. Finally, the BSE Sensex declined by 27.86 points or 0.10% to 27809.35, while the CNX Nifty lost  2.25 points or 0.03% to 8,421.00.