The Indian markets losing their momentum in second half made a modestly lower ending in the last session, there was cautiousness ahead of the Fed’s policy decision, investors’ also awaited a televised debate between France's presidential rivals. Today, the start is likely to remain cautious as the Fed may have maintained status quo on policy rate but downplayed weak first quarter economic growth, indicating a further rate hike. There will be some support with Asian Development Bank’s report that the Indian economy will grow 7.4 per cent this fiscal and 7.6 per cent in the next as the bankruptcy and GST laws will help create a more business-friendly environment. The banking sector stocks will be in action, as the Union Cabinet on Wednesday cleared an ordinance to empower the Reserve Bank of India (RBI) to reduce bad debts of public sector banks. The ordinance will empower the Reserve Bank to effectively deal with the problem of mounting bad loans in the banking sector. The steel sector too will be in action as the cabinet has given green signal to a new policy that aims to achieve steel making capacity of 300 million tonnes by 2030 with an additional investment of Rs 10 lakh crore. The Cabinet also approved a policy for use of domestic steel products in government organisations. There will be lots of earnings reaction, especially in banking sector, to keep the markets buzzing.
The US markets after remaining in negative territory for most of the session made a mixed closing in the last session after the Fed left the key interest rates unchanged but made a hawkish policy statement, in a sign it was still on track for two more rate increases this year. The Asian markets have made a mixed start taking cues from the US markets, with traders in the region now pricing in a 72 per cent chance of a June rate hike, from 63 per cent before the Fed's statement. Metal stocks are under pressure in the region amid inventory concerns in industrial metals.
Back home, Indian equity benchmarks showed a volte-face on Wednesday as what started on a promising note ended as a dismal show. The optimism in local markets petered out completely by the end of trade and the benchmarks drifted into the negative territory despite getting off to a gap-up opening. Sentiments remained subdued on the report that Global agency Fitch Ratings retained the 'BBB-' sovereign rating-the lowest investment grade-on India as weak public finances continue to constrain India's ratings. The rating agency said that India's sovereign ratings balance a strong medium-term growth outlook and favourable external balances with a weak fiscal position and difficult business environment. Further, many investors remained on the sidelines and refrained from any buying activity ahead of the US Federal Reserve's policy outcome, due later today. The Fed is widely expected to stand pat on interest rates, but the post meet statement of the Fed chair Janet Yellen may offer hints on the possibility of a rate hike in June. Traders are largely indulging in stock specific activity, tracking quarterly earnings reports, sales and shipments data of automobile and cement companies, and other corporate news. Meanwhile, market participants got some comfort with the report that Prime Minister Narendra Modi is reviewing the progress of the government's agenda to curb black-money and tax evasion as well as the roll out of the Goods and Services Tax (GST). The government intends to implement the GST from July 1, 2017. Further, Asian Development Bank's (ADB's) Chief Economist Yasuyuki Sawada said the reforms like the GST and the new bankruptcy law will make it easier to do business in India. Finally, the BSE Sensex decreased 26.38 points or 0.09% to 29894.80, while the CNX Nifty was down by 1.85 points or 0.02% to 9,311.95.
