Markets to make a somber start of the new series on weak regional cues

The Indian markets after a choppy day of trade ended lower by over a quarter percent in last session, there was profit taking in recent outperformers on the eve of derivatives expiry. Today, the start of the new series is likely to be somber on weak regional cues, though some recovery can be seen with the International Monetary Fund Managing Director’s statement that the Goods and Services Tax to be implemented from July 1 would help raise India's medium-term growth to above eight per cent, as it will enhance production and the movement of goods and services across Indian states. Meanwhile, Prime Minister Narendra Modi has flagged off the first UDAN flight under regional connectivity scheme (RCS), a scheme launched in order to make air travel accessible to citizens in regionally important cities. There will be some buzz in the gems and jewellary stocks on report that Exports of gems and jewellery from the country increased by about 10 per cent in FY2017 to $43.156 billion from $39.286 billion in FY2016. Pharma sector stocks too may see some action on reports that the Pharmaceutical Export Promotion Council (Pharmexcil) is working jointly with the Centre for harmonisation of export norms with African countries. There will be lots or earnings reaction based on the performance of the companies.

The US markets managed mostly a positive close in last session, though the trade remained lackluster, as traders digested the latest batch of earnings news. There was some cautiousness with the Labor Department report showing an unexpected increase in initial jobless claims in the week ended April 22nd. The Asian markets have made mostly a lower start, as geopolitical concerns lingered and investors assessed corporate earnings before a report on growth in the world’s largest economy.

Back home, Indian equity markets truly depicted the choppiness of F&O expiry session and ended the session slightly in red on Thursday. Final hour of trade mainly played spoil sports for the markets and bourses settled below their crucial 30,100 (Sensex) and 9,350 (Nifty) levels. However, for the April series, Nifty garnered gains of 1.84 percent, while Sensex ended the series with a gain of 1.29 percent. Today, markets made a cautious start after Finance Minister Arun Jaitley expressed concern over the worrying signs of economic protectionism and has said the continued unpredictability in ties between major powers has brought new uncertainties to the fore. Separately, investors took note that a stronger rupee can help check inflation as it will pull down commodity prices, but export-reliant companies such as IT firms and drug makers are likely to take up to 4% hit on their earnings. Exporters’ body Federation of Indian Export Organisations (FIEO) said the rupee appreciation during the last two months has negatively impacted the country’s exports, and demanded immediate support from the government. However, markets made smart recovery and entered into green terrain in afternoon session, as some support with the report that the Securities and Exchange Board of India (Sebi) approved a slew of reform measures to provide a fillip to the domestic markets, which include approval to options trading in commodity derivatives, unified licence for brokers, mutual fund investments through digital wallets, stricter public offer norms and enhanced safeguards to curb illicit fund flows. Sentiments also got soothed with report that bank credit growth improved to 5.52 percent in the first fortnight of the financial year (FY18), after falling to a whopping six-decade low of 5.08 per cent in the previous financial year (FY17). Some support also came with Finance Minister Arun Jaitley asserting that the government was giving top priority to addressing the issue of bad loans while acknowledging that the problem of non-performing assets was ‘adversely impacting’ the Indian banking system. Finally, the BSE Sensex declined 103.61 points or 0.34% to 30,029.74, while the CNX Nifty was down by 9.70 points or 0.10% to 9342.15.