Indian markets edged lower on Monday after data from the Reserve Bank of India (RBI) showed India’s October-December current account deficit widened sharply from a year earlier, driven by higher imports. Today, the start of the session is likely to be on the negative side tracking weak global cues. Sentiments will also remain dampen with Bibek Debroy’s statement that India’s net exports are not doing well even as the global economy is on the recovery path. Debroy further highlighted that India is facing a dilemma from the point of view of pushing exports, as exporters would like exchange rate to depreciate, however exchange rate might not depreciate as much as exporters want because of capital inflows. Meanwhile, RBI in its release said that the country’s manufacturing sector witnessed an improvement in sales growth in the third quarter this fiscal on annual basis, though net profit has remained subdued due to lack of support from other income. There will be buzz in telecom related stocks after the Department of Telecom amended licence norms of service providers to increase the number of instalments for spectrum payments and radiowaves frequency holding limit to provide relief to the sector reeling under deep financial stress. Stocks related to steel sector will be in focus after the government said that 8.22 million tonnes finished steel was exported during April-January of 2017-18. India had exported 8.24 MT during 2016-17 and 4.08 MT in 2015-16.
The US markets closed lower on Monday on lingering concerns about a potential trade war as well as political uncertainty following recent developments in Washington. Traders also looked ahead to the Federal Reserve’s highly anticipated monetary policy announcement on Wednesday. Asian markets were trading in red on Tuesday, as investors stayed cautious following the overnight pullback on Wall Street and ahead of outcome of two-day Federal Reserve policy meeting.
Back home, extending their southward journey for fourth straight session, Indian equity benchmarks ended the Monday’s trade in red terrain with frontline gauges declining below their crucial 10,100 (Nifty) and 33,000 (Sensex) levels, as negative global cues on the prospect of global trade wars and caution ahead of the US Federal Reserve’s meet on March 20-21, kept denting traders’ sentiments. After making a cautious start, markets never looked confidant and extended their southward journey to end at day’s low. Traders reacted negatively on report that India’s October-December current account deficit sharply widened from a year earlier on higher imports. The October-December current account deficit widened to 2.0% of gross domestic product, or $13.5 billion, compared with 1.4%, or $8.0 billion, in the same period a year ago. Traders also remained on sidelines ahead of an informal World Trade Organization (WTO) ministerial meeting to be held in New Delhi on March 19-20, where Representatives from 50 countries will be participating. The 50 nations will engage in free and frank discussions on global trade to explore the options for resolving various issues and re-invigorating the WTO. Traders failed to get any sense of relief with report that overseas investors have pumped in nearly Rs 6,400 crore in the segment in March so far on expectations of rebound in corporate earnings and easing of global oil prices. Investors took note that holding companies of many Indian business houses, corporates investing in subsidiaries and associates, as well as several large individual investors will have to cough up more tax after a Supreme Court ruling last week. The verdict will prevent many companies and investors from treating their entire outgo of interest on borrowings as ‘expenditure’. Separately, with only 16% of the summary sales returns under GST matching with the final returns, the revenue department has started to analyze major gaps with a view to check any possible tax evasion. According to the GST returns data, 34% of businesses paid Rs 34,400 crore less tax between July-December while filing initial summary return (GSTR-3B). Finally, the BSE Sensex declined 252.88 points or 0.76% to 32,923.12, while the CNX Nifty was down by 100.90 points or 0.99% to 10,094.25.
