Markets to rebound on positive global cues

The Indian markets showing a lackluster trade ended marginally in red again in last session, as slew of disappointing economic reports on GDP, core sector output and manufacturing stirred concerns about the state of the economy. Today, the start is likely to see some recovery on positive global cues. Traders will be getting some support with NITI Aayog Vice Chairman Arvind Panagariya’s statement that India will regain the crown of the fastest growing major economy, overtaking China, as early as the first quarter of 2017-18. He said that India, on an annual basis, is ahead of China and will regain the growth momentum soon on the back of host of reforms initiated by the Modi government in the last three years. Meanwhile, Finance Minister Arun Jaitley while maintaining that the decline in fourth quarter GDP print cannot be attributed to demonetisation alone has said that India growing at 7-8 percent is 'fairly reasonable' in the current global context. Also, the Moody’s Investors Service has said that India’s key reforms, including the impending goods and services tax and resolution of sticky loans may improve the country’s credit profile. Realty sector may see some action, as the government has set a target of constructing 51 lakh houses by March 2018 to reach halfway towards its goal of building 1crore houses by 2019.

The US markets rebounded in last session supported by some upbeat economic data that offset the weakness seen in the two previous sessions. Private payroll processor ADP showed a jump in private sector employment in the month of May. The Asian markets have made mostly a positive start led by the rally in the Japanese market, which topped 20,000 for the first time since 2015, as the yen weakened after private American hiring data bolstered confidence in the global economy.

Back home, Indian equity market commenced the new month on a sluggish note, as the benchmarks showcased an unenthusiastic performance on Thursday and settled with moderate cuts as investors remained cautious after India's economic growth unexpectedly slumped to its lowest in more than two years in the March quarter, stripping the country of its status as the world's fastest growing major economy. The country’s GDP or gross domestic product growth slowed to 6.1% in the fiscal fourth quarter from 7% in the third, while Gross value added (GVA), the difference between gross domestic product (GDP) and net indirect taxes, grew by only 5.6 per cent in Q4 - the lowest in at least eight quarters. Besides, a sharp fall in the output of coal, natural gas and crude oil pulled down growth in the group of eight core sectors to a three-month low in April, also weighed on investors’ morale. The core sector expanded 2.5 per cent in the first month of the new fiscal year, compared with 5.3% in March and 8.7% a year earlier. Further, market participants also remained jittery after the report that manufacturing sector growth in the country moderated to a three-month low in May amid softer rise in new orders and production. The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- an indicator of manufacturing activity -- declined from 52.5 in April to a three-month low of 51.6 in May. However, losses remained capped with the report that Fiscal deficit in fiscal 2017 was 3.5% of GDP, in line with the budget projection, reflecting the government's commitment to the process of fiscal consolidation. In fiscal 2016, the deficit was 3.9% of GDP. Furthermore, the government's decision to unveil the budget early seems to have paid off with spending having picked pace in the first month of the financial year itself. The government spent 11.3% of the budgeted expenditure in April, with capital expenditure topping the overall spending. Meanwhile, sugar stocks gained traction after the report that India's 2017/18 sugar production will likely jump a quarter from the previous year to 25 million tonnes as decent monsoon rains are forecast. India's monsoon, which is forecast to deliver normal rainfall in 2017, lashed the country's southwest coast on Tuesday, two days ahead of usual. Finally, the BSE Sensex lost 8.21 points or 0.03% to 31137.59, while the CNX Nifty was down by 5.15 points or 0.05% to 9,616.10.