Markets to make a flat but positive start

The Indian markets continued their jubilant run for yet another session and ended at new record closing high levels in previous session, with Nifty and Sensex surpassing their crucial 11,050 and 36,100 levels for the first time ever. Today, the start is likely to be mildly in green, tailing mixed global cues. Traders will get some encouragement with former Niti Aayog vice chairman Arvind Panagariya’s statement that India has the potential to achieve 10 per cent growth rate, but it needs major reforms in areas in labour laws and land acquisition. He said Indian economy grew 7.5 cent in the first three years of the Narandra Modi government, but two major reforms - demonetisation and goods and services tax - brought the growth rate down a little. Traders will also get some support with Prime Minister Narendra Modi’s showcasing India’s growth story to world leaders and called out for tackling the three major challenges the world faces currently - climate change, terrorism and threat to globalisation. Meanwhile, expressing confidence about the economy’s potential, Finance Minister Arun Jaitley hoped that it would become the third largest economy over the next 25 years. He said, “We have moved from the seventh to the fifth largest economy. Unquestionably in the next 25 years India would perhaps be the largest economy”. Oil stocks will be buzzing on report that Petrol prices hit the highest level since the BJP government came to power in 2014, and diesel touched a record high of Rs 63.20 a litre, prompting the oil ministry to seek a cut in excise duty.

The US markets continued previous session’s northward journey and ended higher on Tuesday, as lawmakers managed to re-open the government following a brief shutdown, passing a stopgap bill funding the government until February 8th. Asian markets have made mostly a negative start despite Wall Street closing higher, as investors stateside focused on earnings releases. Japanese market edged lower, as traders reacted negatively to weaker than expected Japanese trade data for the month of December.

Back home, Indian equity benchmarks ended the Tuesday's trade at record high levels with frontline gauges conquering fresh highs for fifth straight day, settling above their crucial 36,100 (Sensex) and 11,050 (Nifty) levels for the first ever time. Sentiments remained up-beat on report that the International Monetary Fund (IMF) has revised 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. Traders took encouragement from report that International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) has projected that India will grow at 7.4% in 2018 as against China’s 6.8%, making it the fastest growing country among emerging economies following last year’s slowdown due to demonetization and the implementation of the Goods and Services Tax (GST). Markets continued to extend gains on the back of 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. Some support also came after the United Nations Conference on Trade and Development (UNCTAD), in its latest ‘Investment Trends Monitor’ report has stated that India has been ranked at the tenth position among the top host economies for Foreign Direct Investment (FDI) inflows in 2017, backed by inflow of $45 billion overseas investment, while US, China and Hong Kong secured top three places in the list. Investors took note that India’s oil ministry is pushing for a cut in excise duty on petrol and diesel in the upcoming 2018-19 budget to cushion the impact of rising oil prices on its vast consumer base. Prime Minister Narendra Modi, who faces elections in key states later this year, and a nationwide election in early 2019, has faced pressure over a rise in retail prices of petrol and diesel to a record level. Finally, the BSE Sensex surged 341.97 points or 0.96% to 36,139.98, while the CNX Nifty was up by 117.50 points or 1.07% to 11,083.70.