Markets to make a somber start on weak GDP data

The Indian markets after a volatile day of trade ended marginally in red in the last session with traders turning cautious ahead of the GDP data. Today, the start is likely to be somber and traders will be reacting negatively to some weak economic data. India lost the tag of the world’s fastest growing major economy to China with a gross domestic product growth of 6.1 per cent in the three months through March from a year earlier, also slowing from a provisional 7 percent in the previous quarter. Growth for the year ending in March came in at 7.1 percent, in line with the official estimate. Meanwhile, India Inc. has said that the government's note ban move clearly had a debilitating impact on India's economy. Also, the growth of eight core sectors declined to 2.5 per cent in April, dragged down by lower coal, crude oil and cement production. Core sector growth was 8.7 per cent in April last year. However, there will be some solace with the government achieving the fiscal deficit target of 3.5 percent of GDP in 2016-17. As per Controller General of Accounts (CGA) data fiscal deficit was 3.51 percent of GDP or Rs 5.35 lakh crore in 2016-17. The CGA further said that revenue deficit during the last fiscal was 2.02 percent of GDP. There will be some buzz in the PSU oil marketing companies, as petrol and diesel prices were hiked on Wednesday, while Petrol price was increased by Rs. 1.23 the diesel price was hiked by Rs. 0.89. The auto companies will be in focus as they will start announcing their monthly sales numbers.

The US markets ended weak once again in last session, on reports that President Donald Trump has decided to withdraw from the Paris climate accord. Traders also remained unsure about the outlook for interest rates. The Asian markets have made a mixed start, as investors weighed economic data. The Japanese market was though surging close to a percent as the country’s capital spending topped estimates.

Back home, it turned out to be a lackadaisical performance from Indian benchmark indices on Wednesday, as they failed to snap the session in the green territory and settled marginally below the neutral lines. The frontline gauges took a breather, after closing at record highs for the previous sessions, as investors waited for gross domestic product (GDP) data due later in the day and searched for fresh corporate triggers with the results season coming to an end. According to India’s former chief statistician Pronab Sen, the country’s GDP for 2016-17 will get 50 basis points (bps) push to 7.6 percent from the government’s estimate of 7.1 percent, due to the recent revision of the base year of the Wholesale Price Index (WPI) and the Index of Industrial Production (IIP). Further, investors around the world also turned cautious after a powerful bomb exploded in the morning rush hour in the centre of Kabul on Wednesday, killing at least 80 people, wounding hundreds and sending clouds of black smoke into the sky above the presidential palace and foreign embassies. However, losses remained capped with the Moody's Investors Service’s report stating that Indian economy will grow by 7.5 per cent in the current fiscal year, 7.7 per cent in 2018-19 and will reach to around 8 per cent in 3-4 years on the back of government's various reforms. Some support also came with report that Southwest monsoon arriving in Kerala on the expected date this year and also advancing into some parts of the Northeast India. Also, Prime Minister Narendra Modi while speaking at the Indo-German Business Summit in Berlin said that India has one of the most liberal FDI policy regimes in the world and more than 90 percent of foreign investment flows are under automatic route. Meanwhile, Aviation stocks gained traction on expectations that a slide in oil prices would reduce carriers' fuel cost, which typically constitute about 50% of airlines' operating costs. Finally, the BSE Sensex lost 13.60 points or 0.04% to 31145.80, while the CNX Nifty was down by 3.30 points or 0.03% to 9,621.25.