Markets to make a good start on sanguine global cues

The Indian markets suffered sharp cuts in last session, as amid worries of Brexit, inaction by central banks in the US, Japan and Switzerland added to concerns over slowing global growth. Today, the start is likely to see some recovery on sanguine global cues and traders will be going for value buying at lower levels. Traders will be getting some support with report that India's current account deficit narrowed sharply to $0.3 billion or 0.1 percent of GDP in the fourth quarter of FY 2015-16 ended March 31, 2016 from the $ 7.1 billion or 1.3 percent in the third quarter, mainly on account of lower trade deficit. Meanwhile, Prime Minister Narendra Modi has set a target for the taxmen to double the taxpayer base to 10 crore as against 5.43 crore tax payers currently. However, there will be some concern in the markets too, with slow progress of the monsoon which continues to remain in the weak phase and has not made much progress. There will be buzz in the sugar stocks, as the government has slapped further 20% hike in export duty in order to curb shipment of domestic sugar and contain prices at home by raising supply. The duty is however lower than 25 per cent proposed by the Food Ministry. The aviation stocks too may see some action, as the government is considering allowing non-scheduled operators (NSOP) to fly on regional routes.

The US markets made some recovery in last session with stocks showing turnaround over the course of the trading day, mainly due to bargain hunting, with traders picking up stocks at reduced levels. The Asian markets have made an all green start tailing the positive cues from the US markets. Japanese market rebounded from a four-month low, as the yen weakened for the first time in six sessions.

Back home, a session after showcasing a vivacious rally of over a percent, Indian equity indices faltered and failed to extend the winning momentum on Thursday as investors turned edgy after Bank of Japan maintained status quo and refrained from adding fresh stimulus. Besides, cautious policy stance by the US Fed on global growth worries and Brexit fears sparked panic selling at the local markets. Domestic sentiments remained dampened with the report that India's monsoon deficit widened to 25% since the beginning of this month as rainfall in the past day was less than half of the normal level, increasing the anxiety of farmers. Weather scientists say total rainfall is well below average, primarily because the monsoon hit peninsular India a week late and has not progressed smoothly after that. Moreover, investors also remained anxious over report that India’s merchandise exports maintained its stubborn trend for the eighteenth straight month in May, although the rate of fall was lowest since November 2014. Exports contracted 0.79 per cent to $22.17 billion in May, against $ 22.34 billion in May 2015. However, market participants got some confidence with Minister of State for Finance Jayant Sinha’s statement that the government is keeping a watch on the global risk factors to the economy including Brexit, turmoil in the Middle East and spike in oil prices in the international market. Some support also came with a report that India with a low leverage score looks promising among emerging Asian countries, which can deliver a solid growth rate and where the potential for a significant expansion is maximum. On the global front, Asian stock markets ended lower on Thursday after Federal Reserve boss Janet Yellen sounded a warning over a possible British exit from the EU, while the European stocks too declined in early trade. Back home, the key benchmarks failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of selling emerged in the local markets immediately after a somber European market opening. Finally, the BSE Sensex ended lower by 200.88 points or 0.75% to 26525.46, while the CNX Nifty dropped 65.85 points or 0.80% to 8,140.75.