Markets to make a cautious but positive start

The Indian markets rallied in the last session to a fresh record high on some good earnings as well as macro indicators. Today, the start of the day is likely to be in green but the mood may turn cautious, as the United Nations has revised downward India's economic growth forecast for 2017 but predicted an increased 7.9 percent GDP growth next year as it cautioned that stressed balance sheets in the banking sectors will prevent strong investment rebound in the near term. Also, a private report has said that after a six-year wait, private investment growth rates seems to have bottomed out in 2016 but the pace of its revival is expected to be gradual over the next few years. Meanwhile, ahead of the planned GST rollout from July 1, the government is strengthening the body responsible for detecting tax evasion and will set up two new agencies, including one for business intelligence and analytics. The IT sector will keep buzzing, as the government has downplayed job losses in the IT sector, citing retrenchment and automation. There will be lots of important earnings announcements to keep the markets in action.

The US markets made a mixed closing in last session after a choppy session of trade, but despite the choppy trading on the day, the tech-heavy Nasdaq reached another new record closing high. Though, mixed batch of US economic data along with continued turmoil in Washington kept weighing down the sentiments. The Asian markets have once again made a mixed start with many of the indices in the region turning cautious over the turmoil engulfing President Donald Trump’s administration. The Japanese market turned lower as the yen strengthened against the dollar.

Back home, Indian benchmark indices continued their record-setting spree, closing at all-time highs for the fourth time in last five sessions with the Nifty closing above 9,500 level for the first time and the Sensex ending firmly above 30,500 mark. Bullishness seemed to be returning to the markets as investors aggressively piled up positions in key heavyweight stocks on account of robust foreign fund inflows, better-than-expected earnings by some blue-chip companies so far, and overnight gains in the US markets. Some support also came with the report that India's monsoon rains are expected to arrive on the southern Kerala coast on May 30, two days ahead of schedule. India looks likely to receive higher monsoon rainfall than previously forecast as concern over the El Nino weather condition has eased. Further, investors’ morale got a boost with Industry body FICCI’s latest Economic Outlook Survey pegging India's gross domestic product (GDP) growth at around 7.4% for the fiscal year 2017-18. The survey was conducted during March and April 2017 and recorded a median GDP group forecast of 7.4% for the current fiscal year, with a minimum and maximum level of 7% and 7.6% respectively. The pick-up in overall GDP growth will also be supported by an improvement in industry and services sector growth.  The markets paid no heed to the report that India’s trade deficit swelled to a 29-month high in April as imports led by gold grew sharper than exports. While Imports grew 49% from a year ago to $37.8 billion, buoyed by a 211% rise in gold imports, exports increased 19.7% to $24.6 billion, widening trade deficit to $13.2 billion from $4.8 billion in the year ago period. Meanwhile, India and Japan are together embarking upon multiple infrastructure projects across Africa, Iran, Sri Lanka and Southeast Asia in what could be viewed as pushback against China’s massive, unilateral infrastructure initiatives under the One Belt One Road (OBOR) project connecting it with Europe and Africa. Finally, the BSE Sensex gained 258.63 points or 0.85% to 30580.75, while the CNX Nifty was up by 64.80 points or 0.69% to 9,510.20.