Benchmarks likely to make optimistic start

Indian equity markets fell sharply on Friday, as financials succumbed to selling pressure on worries over the Rs 11,300-crore fraud case at Punjab National Bank (PNB) and weak trade data stirred concerns about the economic outlook. Today, markets is likely to start in green terrain, tracking firm global markets, as investors remain optimistic about global growth. However, traders may remain concern with report that an index mapping the country’s short-term financial conditions has plunged over 12 points for the fourth quarter of the current fiscal ending March 31, as compared to the previous quarter. Ongoing developments in PNB fraud case may influence trading sentiment. Meanwhile, in lieu of the ongoing fraudulent transaction scam involving Punjab National Bank, the ASSOCHAM demanded that the government to reduce its stake in banks to less than 50 percent. Banking stocks would continue to remain in focus after the government’s chief economic advisor Arvind Subramanian underlined the need for more privatization in the banking sector. Steel stocks will remain in focus on report that India’s export of finished steel shrank by over 30 per cent to 0.616 million tonnes (MT) during January 2018. Stocks related to coal sector too will be buzzing on report that the country’s coal import increased by 12.4 per cent to 18.49 MT in January, against 16.44 MT in the same month of the previous fiscal, according to m-junction, a leading name in the e-auction space.

The US markets ended mixed on Friday with the benchmarks paring most of their early gains, as political news sparked late-session turbulence. Asian equities were trading higher, as confidence in equities continued to return, with some markets in the region reopening after the Lunar New Year holiday. Japanese Nikkei edged higher, as the country posted a merchandise trade deficit of 943.417 billion yen in January, an improvement of 13.6 percent from a year earlier.

Back home, Friday turned out to be a dismal day of trade for Indian equity benchmarks, with frontline gauges ending with a cut of around a percent, as disappointing trade balance data and worries over the Rs 11,300 crore fraud case at PNB kept the underlying sentiment cautious. Markets started the session on an optimistic note but failed to gain any momentum and entered into red terrain, as traders turned pessimistic on report that India’s merchandise trade deficit for January widened from a year ago. The visible trade deficit increased to a 56-month high of $16.30 billion in January from $9.90 billion in the same month last year as export growth slowed down and imports of precious stones and crude oil surged. Exports grew an annual 9.07 percent, while imports jumped 26.10 percent. Sentiments also remained dampened on report that the growth of India’s debt capital markets moderated by three percent in the current year with a growth of 16 percent in the value of corporate bonds outstanding by December end, driven by a slowdown in bond issuance. Meanwhile, IMF said that the tax collection assumptions in India’s budget is ambitious but there is a need to look into the fiscal implications of some of the initiatives that are presently unfunded. The market participants also remained worried, as the World Bank identified two global risks that could jeopardise the country’s progress towards a global middle-class status. These two risks are anti-international trade sentiment and climate change. The World Bank further noted that India’s services exports are being challenged and the climate change is posing threat to the agricultural sector. Meanwhile, Road Transport and Highways Minister Nitin Gadkari stated that the government would not bring any separate electric vehicle policy and would just frame rules for the category. Separately, Union minister D V Sadananda Gowda has said that the government will change the base year to 2017-18 for the calculation of GDP and IIP numbers while for retail inflation the year will be revised to 2018. Finally, the BSE Sensex declined 286.71 points or 0.84% to 34,010.76, while the CNX Nifty was down by 93.20 points or 0.88% to 10,452.30.