Markets to make a somber start on weak macro data

The Indian markets lost around half a percent in last session ahead of key macro data and amid heightened geopolitical worries. Today, the start of the final trading day of the week is likely to remain somber tailing the weakness in other global markets and the traders will be negatively reacting to the economic data announced after the market hours yesterday. In a double whammy, India's industrial production contracted by 1.2 percent in February due to poor performance manufacturing sector, while retail inflation jumped to a five-month high of 3.81 percent in March on costlier protein items, edible oils and non-food products like fuel and light. Traders will be eyeing the official start of the fourth quarter earnings session, as Infosys, India's second biggest IT services exporter, will report its March quarter results. Traders will not only be eyeing its earnings but guidance too amid crackdown on H-1B visas by the Trump administration. Traders will also be reacting to the Fiscal Responsibility and Budget Management (FRBM) Review Committee report which said that centre can take a pause on the fiscal consolidation front over the next three years by maintaining a fiscal deficit to GDP ratio of 3% till 2019-20.

The US markets made another soft closing in the last session. stocks remained mostly negative throughout the trading day amid lingering geopolitical concerns. The Asian markets have made mostly a lower start led by the Japanese market which is down by another over a percent after the dollar slumped and Treasury bond yields dropped to the lowest level this year in reaction to President Donald Trump’s comments that the greenback was getting too strong and that he won’t brand China a currency manipulator.

Back home, a session after showcasing a wonderful rally, Indian equity indices faltered and failed to extend the winning momentum on Wednesday as investors turned cautious ahead of key economic data- index of industrial production (IIP) for February and consumer price index (CPI) for March-to be released later in the day. Sentiments remained downbeat over Former finance minister P Chidambaram's comment that a more realistic deadline for rolling out the goods and services tax was October 1, instead of the scheduled date of July 1. While maintaining GST would be good for the country in the long-term, the senior Congress leader cautioned the government saying that implementation of the mega tax reform could be inflationary in the short-term. He cited the preparation time needed for small and medium-scale enterprises to get on to the new tax reform structure and the time needed for activating the GSTN platform as the main reasons why he thought October was a more realistic deadline. Adding the woes, leading exporters' body EEPC India has raised a red flag against the debilitating impact of sharp rise in rupee against dollar in the last three months on exports, which may slip off from the recovery path, if the situation persists further. Since the first week of January, rupee has gained by close to six per cent, eroding significantly the exporters' margins and more importantly the competitive edge against India's trade rivals in the international markets. Finally, the BSE Sensex decreased 144.87 points or 0.49% to 29643.48, while the CNX Nifty was down by 33.55 points or 0.36% to 9,203.45.