Markets likely to make an optimistic start

Indian equity markets ended lower for fourth straight session on Monday, as weak global cues overshadowed the BJP’s spectacular performance in recently-held elections in three North Eastern states. Today, the markets are likely to make an optimistic start following firm global cues. Traders will be getting some support with report that the economy will grow up to 7.5 per cent in FY19, supported by domestic consumption, policy push, and synchronised global growth. In the current fiscal, GDP growth is expected to be 6.5 per cent. The Economic Survey 2018 has pegged FY19 growth at 7-7.5 per cent. Some support will also come with report that the Centre will constitute a group to suggest necessary changes in the policy for special economic zones (SEZs). Designed to facilitate exports, units in SEZs get certain fiscal and non-fiscal incentives such as no licencing required for imports and full freedom of sub-contracting, as well as direct and indirect tax benefits. Market participants may also get support with report that the Reserve Bank of India (RBI) will inject Rs 1 lakh crore short term money into the banking system ahead of the financial year-end that normally sees cash crunch.  The move is likely to keep short term rates under check benefiting borrowing companies. Stocks related to steel sector will be buzzing on report that export of steel to the US from various countries is likely to fall by 9-14 million tonne(MT) as Trump government decides to impose higher tariff on import of steel and aluminium. There will be buzz in stocks related to apparel on report that the pace of growth in country's apparel exports will depend on the industry's ability to wade through the new taxation and export incentive regime and intense global competition.

The US markets closed higher on Monday ahead of the Labor Department’s monthly employment report due to be released on Friday. Traders ignored Institute for Supply Management’s report showing a slight slowdown in the pace of growth in the service sector in the month of February. Asian markets were trading mostly in green after U.S. President Donald Trump faced growing pressure from political allies to pull back from proposed steel and aluminum tariffs, easing investor worries about an imminent trade war.

Back home, Monday turned-out to be a disappointing day of trade for Indian equity benchmarks, where frontline gauges lost around a percentage point to end below their crucial 33,800 (Sensex) and 10,400 (Nifty) levels. After making a pessimistic start, domestic gauges traded in red terrain throughout the day, as traders remained concerned with US President Donald Trump’s statement that he would impose tariffs on imports of steel and aluminium products, in a move he said would protect US industry. Sentiments remained dampened with report that activity in India’s service industries contracted in February for the first time since November as rising price pressures led to a decline in new businesses orders. The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February, its lowest level since August. Adding to the pessimism, foreign investors have pulled out more than Rs 11,000 crore from Indian stocks in February 2018 amid better opportunities in other emerging markets. This is the largest outflow in five months. However, the total inflow by foreign portfolio investors (FPIs) in the Indian equity markets stood at Rs 13,781 crore in January 2018. Traders failed to get any sense of relief with Finance Minister Arun Jaitley’s statement that India would retain its position of fastest growing economy in the coming decades, like China did in the last three decades. He said, the way the situation in the world is changing there is a great opportunity that has come in the way of India. Market participants also overlooked report that the BJP expanded its foothold in northeast with its stunning victory in Tripura polls and improved performance in Meghalaya and Nagaland elections, boosting its prospects for 2019 Lok Sabha polls. Finally, the BSE Sensex tumbled 300.16 points or 0.88% to 33,746.78, while the CNX Nifty was down by 99.50 points or 0.95% to 10358.85.