Markets to make an optimistic start on firm global cues

The Indian markets continued their jubilant run and ended at fresh record closing high levels in previous session, with a private report enlightening that a greater proportion of provident fund savings could be headed for the stock market with shares rising to successive records in past weeks. Today, the start is likely to be on a positive side, tailing firm global cues. Traders will get some encouragement with report that the International Monetary Fund (IMF) revising its forecast for world economic growth in 2018 and 2019, saying sweeping US tax cuts were likely to boost investment in the world’s largest economy and help its main trading partners. Sentiments may also remain buoyant after IMF and the World Bank have pegged India’s growth in FY18 to be around 6.7%, which is a tad higher than the 6.5% projected earlier. Traders may also get some support from report that India has moved up on a global index of talent competitiveness to the 81st position, but remains a laggard among the BRICS nations. Meanwhile, banking shares will remain in focus on Assocham-Crisil’s report that India’s banking sector will be saddled with gross non-performing assets (GNPAs) worth a staggering Rs 9.5 lakh crore by March-end, up from Rs 8 lakh crore in the year-ago period. The high level of stressed assets in the banking system however provide enormous opportunity for asset reconstruction companies (ARCs) which are important stakeholders in the NPA resolution process.

The US markets ended higher on Monday, as traders did not paid much attention to the subsequent government shutdown but saw further upside amid signs that the shutdown will be resolved. Asian markets have made a jubilant start and are heading for fresh all-time highs, as investors turn with optimism toward the earnings season after the U.S. government shutdown moved toward an end. Japanese market edged higher ahead to the Bank of Japan’s monetary policy decision due later in the day.

Back home, extending their record hitting spree for fourth consecutive day, Indian equity benchmarks once again settled at fresh closing high levels, with Nifty conquering its crucial 10,950 mark, while Sensex ended tad below its crucial 35,800 level. After making an optimistic start, domestic gauges gained momentum in second half of trade, as traders took some encouragement with report that overseas investors have put in a whopping Rs 87 billion in the Indian capital markets this month so far on expectation of recovery in corporate earnings and attractive yields. This follows an investment of Rs 2 trillion in the capital markets (equity and debt) in the entire 2017. Some support also came after a report enlightened that a greater proportion of provident fund savings could be headed for the stock market with shares rising to successive records in past weeks. Such a move could more than double the provident fund money invested in exchange-traded funds (ETFs) over time. The government is considering a plan to raise the equity investment limit for the Employees’ Provident Fund Organisation (EPFO) to 25% from 15%. Traders also got some support with IMF Chief Christine Lagarde and Norway’s Prime Minister Erna Solberg's statement that raising women's participation in the labour force to the same level as men can boost India's Gross Domestic Product (GDP) by 27 per cent. Private report stating that India will overtake China to be the fastest growing large economy in 2018 and the country’s equity market will become the fifth largest in the world, too aided sentiments. The report added that while the rest of the world offers low growth and insufficient structural change, India, by contrast, is seen as a reforming economy with the prospect of strong long-term growth. Finally, the BSE Sensex surged 286.43 points or 0.81% to 35,798.01, while the CNX Nifty was up by 71.50 points or 0.66% to 10966.20.