Markets to get a positive start reacting to IMD’s monsoon forecast

The Indian markets after struggling through the day managed a flat but positive close in the last session, investors mainly were reacting to earnings announcements and got some support with IMF report that India’s growth will rebound. Today, the start is likely to remain in green and any downside is restricted on mostly positive regional cues and with the Indian Meteorological Department (IMD) predicting a ‘normal’ monsoon this calendar and expecting 100 per cent rainfall instead of 96 per cent as predicted earlier. It has said that recent development on El-Nino indicates that the monsoon could be normal this year and it could reach 100 per cent of the long period average. There will be buzz in the market with commerce & industry minister Nirmala Sitharaman stating that India’s manufacturing policy will soon be overhauled with the objective of creating more jobs in an environment where technology is rapidly replacing labour. There will be some buzz in companies doing business in defence sector, as Finance and defence minister Arun Jaitley has said that foreign companies need to be incentivised to set up defence manufacturing bases in India. The telecom sector stocks are likely to come under pressure, as the India’s largest telecom services provider Bharti Airtel posted a 72% decline in net profit for the fourth quarter, impacted by free services offered by new entrant Reliance Jio Infocomm until 31 March. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets made a mixed closing in last session, as the traders remained on sidelines ahead of key economic data releases. Hope that US President Donald Trump will cut corporate and personal taxes too remained in focus for investors. The Asian markets have made mostly a positive start with dissipating concerns over North Korea’s nuclear program. The Chinese market too was trading higher though the producer price index rose less than forecast in April at 6.4 percent from a year earlier.

Back home, Indian benchmark indices ended the session on a flat note, with the Nifty managing to hold on to its 9300 mark. Today's session largely remained characterized by consolidation as the aimless indices moved only sideways in a tight band amid lack of triggers. Sentiments got some support with IMF's report indicating that India's growth is expected to rebound to 7.2% in the 2017-18 fiscal and 7.7% in 2018-19. According to the report, the temporary disruptions (primarily to private consumption) caused by cash shortages accompanying the currency exchange initiative are expected to gradually dissipate in 2017 as cash shortages ease. It noted that the investment recovery is expected to remain modest and uneven across sectors as deleveraging takes place and industrial capacity utilisation picks up. Some support also came with the report that mutual fund (MF) industry's asset base crossed the Rs 19 lakh crore mark in April on the back of fresh inflows in equity, debt and money market segments. The assets under management (AUM) of the MF industry, comprising 42 players, rose to an all-time high of Rs 19.26 lakh crore at the end of April from Rs 17.55 lakh crore at the end of March 2017. However, traders turned cautious after agriculture minister Radha Mohan Singh asked chief ministers of all states and union territories to review their preparedness to mitigate possible drought in the event of a rain deficit in the upcoming monsoon season. As per the weather office's forecast issued earlier this month, the June-September monsoon rainfall this year is expected to be 96% of the long-term average, with a 5% error margin. Meanwhile, India's food safety regulator has proposed a tax on all packaged foods with high fat, sugar and salt content. The regulator also proposed strict labelling norms for such products and a bar on advertising them on children's television channels. The Food Safety and Standards Authority of India (FSSAI), however, did not specify the quantum of tax that it wants imposed. Finally, the BSE Sensex gained 7.10 points or 0.02% to 29933.25, while the CNX Nifty was up by 2.80 points or 0.03% to 9,316.85.