Indian markets edged lower on Tuesday to extend losses for the fifth straight session, with banking stocks coming under heavy selling pressure once again. Today, the start of the session is likely to be slightly in green, as traders may go for some bargain hunting after five sessions of continuous drubbing. Markets will get some support with report that the government is planning to pitch for an upgrade in its sovereign ratings from global rating agency Fitch, highlighting its structural reform initiatives and a revised fiscal consolidation framework. Officials from the Finance Ministry are scheduled to meet representatives from Fitch Ratings on March 7 as part of the annual review by the agency. Traders will also take some encouragement with private report that The Indian economy is likely to recover gradually to 7.1 per cent in the 2018-19 financial year, as GST-related disruptions have eased and consumption levels have improved. However, growing fears over the PNB scam and continued selling pressure from FIIs on expectations of faster than anticipated interest rate hike in the U.S. may keep underlying sentiment cautious. Telecom stocks will be buzzing on report that the Cabinet will on Wednesday take a call on providing relief to telecom operators, and look at raising the spectrum cap from the current 25 per cent to the industry demand of 35 per cent, among other things.
The US markets closed higher on Tuesday amid easing geopolitical concerns following reports that North Korea is willing to talk about denuclearization. Asian markets were trading mixed on Wednesday, as risk appetite appeared to recover slightly after taking a knock earlier on news that a top Trump economic advisor would be resigning.
Back home, extending their southward journey for fifth straight session, Indian equity benchmarks ended the Tuesday’s trade with a cut of over a percentage point, breaching their crucial 33,400 (Sensex) and 10,250 (Nifty) levels. Markets started the session on an optimistic note and traded in green terrain for most part of the day, as traders took some encouragement 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. Traders also took some support with a private report estimating that the Goods and Services Tax collection for 2018-19 would grow at a rate of 14-16 per cent, bringing it closer to the decadal growth rate in indirect taxes of just under 14 per cent. Reports that the Centre will constitute a group to suggest necessary changes in the policy for special economic zones (SEZs) too aided sentiments. 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 also got 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. However, sharp selling in last leg of trade mainly played spoil sport for the Indian markets, which dragged the key gauges lower. Traders remained concerned with a private report enlightening that India has signaled a larger fiscal deficit for the federal government for the year to March 2018 and while it has forecast a lower gap for next year, with a national election due in early 2019 many expect that target to be breached. Compounding those concerns are higher state government deficits, lower-than-expected revenues from the newly introduced goods and services tax, and farm loan waivers. Finally, the BSE Sensex tumbled 429.58 points or 1.27% to 33,317.20, while the CNX Nifty was down by 109.60 points or 1.06% to 10.249.25.
