Markets likely to make strong start on firm global cues

Indian markets ended lower on Friday as banking stocks once again succumbed to heavy selling pressure in last leg of trade. Today, markets are likely to make strong start tracking firm global cues. Traders will be eyeing foreign fund inflows and macro-economic data on inflation and industrial production to be released later this week. Traders will get some encouragement with IMF stating that the Indian economy now seems to be on its way of recovering from disruptions caused by demonetisation and roll-out of goods and services tax. At the same time, the IMF has underscored the significance of reforms in other key sectors like education, health and improving the efficiency of the banking and financial systems. Traders will also get some support with industry body FICCI’s report that manufacturers in the country have a positive outlook for the sector in the January-March quarter on the back of higher production. The proportion of respondents reporting higher output growth during the Q4 2017-18 has increased significantly to 55 per cent from 47 per cent in Q3. Some support may also come later in the trade on report that the Centre is expected to get around Rs 8,044 crore on account of dividend from Coal India as the miner's board approved payment of interim dividend for the financial year 2017-18 at a rate of Rs 16.50 per share. The miner's total payout on account of this would be to the tune Rs 10,242 crore. There will be buzz in infrastructure related stocks after NHAI has said that it will strive to construct 1,100 km of highways this month to achieve its target of building 3,500 km in the ongoing fiscal. Stocks related to dairy space will be buzzing with report that milk production in the country increased by 20 per cent from 137.7 million tonnes to 165.4 million tonnes between 2014 and 2017.

The US markets edged higher on Friday as geopolitical tensions eased after North Korean leader Kim Jong Un had offered to halt nuclear and missile tests and expressed his desire to meet with U.S. President Donald Trump through South Korean national security adviser Chung Eui-yong. Asian stocks got off to a strong start on Monday, tracking stateside gains in the last session on expectation-topping jobs data. Japanese Nikkei edged higher in early deals ahead of release of Q1 numbers for the BSI manufacturing index, plus preliminary February numbers for machine tool orders today.

Back home, Friday turned out to be a disappointing day of trade for Indian equity benchmarks where key gauges ended the session marginally in red. Markets started the session on an optimistic note as traders took some encouragement with report highlighting that the direct tax collections jumped by nearly 20 per cent between April and February this fiscal as the Income-Tax Department races to meet its full year targets. The net direct tax receipts grew by a hefty 19.5 per cent in the first 11 months of the fiscal amounting to Rs 7.44 lakh crore. Net corporate income tax collections increased by 19.7 per cent in the period, while personal income tax receipts grew by 18.6 per cent. Some support also came with Economic Affairs Secretary Subhash Chandra Garg’s statement that the 7.2 per cent expansion in the economy during October-December quarter has put the country in one of the highest growth bracket in the world and recovery will continue to be sharp going ahead. The third quarter growth of 7.2 per cent was highest in five quarters. The previous high was recorded at 7.5 per cent in the July-September quarter of 2016-17. But, sell off in last leg of trade played spoil sports for domestic markets and dragged the key gauges in red terrain, as anxiety spread among the investors with a private report stating that India Inc has nearly 1.8 lakh crore of cash trapped in their balance sheet as working capital situation worsens on account of increase in inventory levels. The report also found that the cash conversion cycle has deteriorated by 4percent from FY16, to 44 days in FY17. Traders also remained cautious with Indian Steel Authority’s report that US President Donald Trump’s move to hike import tariffs on steel will adversely hit India’s local markets. Traders took note of another private report that Indian retail inflation likely to eased to a four-month low in February on softening prices for vegetable and other perishable foods, but probably stayed above the Reserve Bank of India's target. Finally, the BSE Sensex shed 44.43 points or 0.13% to 33,307.14, while the CNX Nifty was down by 15.80 points or 0.15% to 10,226.85.