Markets to extend the somberness amid sluggish global cues

The Indian markets after a range bound day of trade ended flat with negative bias in last session, as investors awaited cues from the Q3 earnings season and next month's Union Budget. Today, the start is likely to remain somber on sluggish global cues and traders will be eyeing the official start of the third quarter earnings season with quarterly earnings from TCS and IndusInd Bank due later in the day. Traders however, will be getting some support with global rating agency Moody's latest report, which has said India and China remain the fastest growth economies in Asia Pacific region. Also, on the domestic front the cabinet’s decision to allow foreign airlines to invest up to 49% in ailing Air India, and ease foreign direct investment (FDI) policies in some critical areas, including single-brand retail, broking services in construction, pharmaceuticals and power exchanges, will keep the markets buzzing. Meanwhile, NITI Aayog Vice Chairman Rajiv Kumar after a meeting of Prime Minister Narendra Modi with country's leading economists said that employment generation was the key going forward. Agri related stocks will be in focus, as the economists during an interactive session with Prime Minister Narendra Modi, organised by NITI Aayog suggested need to shift focus to increasing farmers’ income rather than increasing just production.

The US markets despite coming off their lows ended marginally in red in the last session. Profit taking mainly contributed to the weakness after the major averages once again climbed to new record closing highs in the previous session. The Asian markets have made mostly a soft start and some indices in the region are down by over half a percent as rally mood showed signs of waning as the yen remained near a six-week high and traders dialed back their appetite for risky assets, there was jump in bond yields as the news broke that senior officials in Beijing have recommended slowing or halting purchases of US bonds.

Back home, Indian equity benchmarks ended the choppy day of trade with minimal losses, as traders remained on sidelines ahead of ahead of key corporate earnings later this week and the federal budget next month. Market participants also opted to stay away from buying risky assets ahead of the outcome of meeting organised by government think tank NITI Aayog, and attended by a host of ministers including Finance Minister Arun Jaitley, NITI Aayog functionaries and leading economists. Some concerns also came with rating agency ICRA’s latest report stating that credit growth of Infrastructure finance firms will remain subdued over the short term. However, losses remained capped with the World Bank projecting India’s growth rate to 7.3 per cent in 2018 and 7.5 for the next two years. It said that with an “ambitious government undertaking comprehensive reforms”, India has “enormous growth potential” compared to other emerging economies. The 2018 Global Economics Prospect released by the World Bank also said that India, despite initial setbacks from demonetisation and Goods and Services Tax (GST), is estimated to have grown at 6.7 per cent in 2017. Traders also got some solace with domestic rating agency CRISIL expecting India Inc’s revenue growth to hit a five-year high of 9 per cent for the October-December 2017 period, on higher realizations in steel, aluminium, cement and crude oil-linked sectors, and a pick-up in consumption-driven sectors such as auto and aviation. However, profits will continue to contract, primarily due to the rising commodity prices. Traders also took some comfort with the Cabinet approving key changes in India’s Foreign Direct Investment (FDI) policy by easing investment norms across sectors including aviation, construction and single brand retail among others. These amendments are government’s broader strategy to liberalize and simplify the FDI policy to facilitate ease of doing business and turn India into a global investment hotspot. Finally, the BSE Sensex slipped 10.12 points or 0.03% to 34,433.07, while the CNX Nifty was down by 4.80 points or 0.05% to 10,632.20.