Markets to make pessimistic start on weak global cues

Indian markets edged slightly lower on Tuesday, with banks suffering heavy losses once again, after media reports suggested that the amount of fraud at PNB could be more than the current estimate. Today, the start of the session is likely to be on negative side on weak global cues and traders will be eyeing the dataprint for the December quarter GDP and fiscal deficit data that will be announced later in the day. Traders will also be eyeing manufacturing PMI to be released later in the day. Market participants may remain concern with report that the collection of Goods and Services Tax (GST) slipped marginally to Rs 86,318 crore in January, from Rs 86,703 crore in December. The total revenue received under GST for the month of January 2018 (received in January/February up to February 25, 2018) has been Rs 86,318 crore. However, investors may get some support with Finance Minister Arun Jaitley’s statement that India’s economy has the potential to achieve a growth rate of more than 7-8 per cent in view of policy changes accompanied by a supportive global environment. He also said India will continue to remain one of the fastest growing economies in the world. On GST, he said that a single rate for GST cannot work at the moment but the compliance will be made simpler. There will be buzz in Steel related stocks on World Steel Association’s report that India’s crude steel production grew 2.5 per cent to 9.02 million tonne (MT) in January 2018 compared to 8.81 MT in the year-ago month.

The US markets closed sharply lower on Tuesday after new Fed Chairman Jerome Powell highlighted the strengthening economy during his congressional testimony, raising concerns over the possibility of four rate increases this year. Asian markets were trading in red on Wednesday, following a congressional testimony from the Federal Reserve's new chief.

Back home, Indian equity benchmarks ended the Tuesday’s trade in red terrain as traders opted to remain on sidelines ahead of Gross Domestic Product (GDP) numbers for December quarter to be released on Wednesday. Despite making an optimistic start markets turned negative and traded choppy throughout the session, as traders remained concerned on report that investments in the domestic capital market through participatory notes (P-notes) plunged to a nearly eight-and-a-half-year low of Rs 1.19 lakh crore in January-end amid stringent norms put in place by regulator SEBI to check misuse. Traders also remained worried on private report stating that inflation is expected to trend higher and though RBI may keep policy rates on hold in 2018-19, there are also increasing chances of a rate hike. Sentiments remained downbeat, as the government categorised around 9,500 non-banking financial companies -- about 80 per cent of the NBFCs in the country -- as high risk prone as they have not complied with a stipulated provision of the anti-money laundering law. However, losses remained capped as traders get some relief with report that India’s economic recovery is expected to have gathered momentum as economists expect India’s GDP to grow 6.9 percent in the December quarter, the fastest pace in a year and up from 6.3 percent in July-September quarter, on the back of increased spending by consumers, businesses and the government. Investors also got some solace with economic think-tank NCAER’s report that the Indian economy is projected to grow at 6.7 per cent in the current financial year and 7.5 per cent in 2018-19. The figures are in line with the growth projections in this year’s Economic Survey, which said India is likely to clock 7-7.5 per cent growth in 2018-19, up from 6.75 per cent in the current fiscal. Some support also came with report that the government plans to cut red tape and ease rules for foreign portfolio investors (FPI), as it seeks to attract more investments into Asia’s third-largest economy. Finally, the BSE Sensex shed 99.36 points or 0.29% to 34,346.39, while the CNX Nifty was down by 28.30 points or 0.27% to 10,554.30.