Indian equity markets edged lower on Wednesday tracking weak global markets, though losses remained capped as Wholesale prices climbed 2.48 percent year-over-year in February, slower than January's 2.84 percent rise. Today, the start of the session is likely to be on negative side on weak global cues and traders will be eyeing the Balance of trade figure for the month of February to be released later in the day. However, traders will get some support with World Bank stating that India’s economy is expected to grow 7.3% in the next financial year and accelerate to 7.5% in 2019-20, bottoming out from the impact of demonetisation and GST, even as it highlighted private investments and exports as the two lagging engines of growth. In its biannual publication, India Development Update, the World Bank said it expected Indian economy to clock a growth rate of 6.7% in the current financial year. Moreover, The World Bank is planning to raise lending to India by about $1 billion every year for the next five years from the current $3 billion to $3.5 billion. The lending will be mainly for infrastructure projects. There will be buzz in realty sector stocks after a report stating that the market size of the Indian real estate sector is expected to reach $180 billion by 2020 with the housing sector contribution doubling to 11.2 per cent of GDP.
The US markets closed lower on Wednesday on rumors that the Federal Reserve will raise interest rates by a half-point when the central bank meets next week. Anxiety over President Trump's trade war comments also rattled markets. Asian markets were trading in red on Thursday, with regional stock indexes recording slight losses after Wall Street declined amid concerns over heightened trade tensions.
Back home, Indian equity benchmarks pared most of their morning losses to end largely flat on Wednesday. Markets started the session on pessimistic note with report that the Reserve Bank of India (RBI) is unlikely to reduce key policy rates in 2018 despite a dip in retail inflation in February. Risks like the higher minimum support prices (MSPs) for food grains promised in the budget can push up the inflation in the next fiscal year. Terming it as a challenging period for the central rate setting panel, the report highlighted that the rising MSPs are a risk and once inflation starts rising from the second quarter, the apex bank would turn more hawkish. Investors also took note of a private report stating that based on the current monthly rate of Rs 87,400 crore, the street expects that the Goods and Services Tax (GST) collection may remain range-bound unless compliance measures improve, particularly invoice matching. The lower GST run rate poses a risk to FY19 tax collection and to fiscal deficit. Meanwhile, the Centre has released Rs 28,398 crore as GST compensation to states for July-December, with Karnataka getting a major pie. The government has lowered the indirect tax revenue collection forecast in the revised estimates by Rs 51,856 crore to Rs 8.75 lakh crore in the current fiscal. As per the Budget estimates, over Rs 9.26 lakh crore was to be collected from indirect taxes. Selling got extended and markets even went to test psychological 10,350 (Nifty) and 33,600 (Sensex) levels. But, key gauges witnessed recovery from thereon and pared most of their initial losses to end largely unchanged, supported by easing WPI inflation. India’s inflation on wholesale level softened in the month of February, continuing its easing trend for the third straight month. According to the latest data released by the government, WPI stood at 2.48% (provisional) in February as against 2.84% (provisional) for the previous month and 5.51% during the corresponding month of the previous year. Some support also came with report highlighting that revival in rural demand, increased infrastructure spending is likely to drive India's growth in current year, even as increasing debt and trade protectionism could pose a challenge. Traders also took some solace with Commerce and Industry Minister Suresh Prabhu’s statement that the new industrial policy, which will be released soon, will focus on modernising existing industries, besides pushing for frontier technologies like robotics and artificial intelligence. Finally, the BSE Sensex shed 21.04 points or 0.06% to 33,835.74, while the CNX Nifty was down by 15.95 points or 0.15% to 10,410.90.
