Markets likely to make negative start on feeble global cues

Indian shares ended notably higher on Monday as trading resumed after a four-day holiday weekend. Today, the markets are likely to open in red, with escalating trade tensions between the U.S. and China. Investors will also be cautious ahead to the Reserve Bank of India’s (RBI) policy decision on April 5 for directional cues. The central bank is expected to maintain status quo on rates despite increased risks to inflation posed by rising oil prices and a hike in minimum support price (MSP) announced in the Budget 2018. Traders will also remain concern with ICRA’s report that more Indian companies are likely to default on their borrowings in the fiscal year that started in April compared with the previous year on higher interest costs and a deterioration in business conditions. However, traders will get some support later in the day with report that a steep rise in output of cement and fertilisers pushed up the growth of the core sector to 5.3% in February even as refinery products, electricity, coal, and natural gas production made the output of the infrastructure industries grow slower than 6.1% in January. There will be buzz in banking stocks after the RBI allowed banks to stagger the bond investment depreciation provisioning over four quarters. Meanwhile, rating agency Crisil has warned that the ongoing probes into the frauds and allegations of improprieties against bankers will dent credit growth in the new fiscal year.

The US markets ended sharply lower on Monday after China announced it is imposing tariffs on 128 imported goods originating in the U.S. The move by China was in response to President Donald Trump's decision to impose tariffs on steel and aluminum imports. All the Asian markets are trading in red in early deals, with Japan leading losses in the region after markets stateside came under pressure from the drop in tech stocks and trade-related worries.

Back home, Monday turned-out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges recapturing their crucial 10,200 (Nifty) and 33,200 (Sensex) levels, ahead of the RBI policy meeting on April 4-5, although the central bank is unlikely to raise rates despite increased risks to inflation posed by rising oil prices and a hike in minimum support price (MSP) announced in the Budget 2018. After making a mildly positive start, local bourses extended gains with State Bank of India’s (SBI) research report Ecowrap stating that the Index of Industrial Production (IIP) may grow in the range of 8-9% in February and March 2018, with a healthy growth in SBI Composite Index, an indicator for tracking India's manufacturing activity. Traders also took some encouragement with Chief Economic Adviser Arvind Subramanian’s statement that GST and demonetisation are done and India can now propel itself into a higher growth trajectory. Some optimism also came with Niti Aayog CEO Amitabh Kant’s statement that India will reap benefits of the structural and institutional reforms in the next couple of years. Traders shrugged off report that India’s fiscal deficit accelerated to Rs 7.15 lakh crore for the period April-February 2017-18 or 120.3% of the budgeted target for the current fiscal year. Net tax receipts in the first 11 months of 2017/18 fiscal year were Rs 1.03 trillion. Traders also ignored a private report that the value of private equity and venture capital investments in Indian companies during the quarter ended March 2018 declined 49 per cent to $3.7 billion across 133 deals, compared with $7.3 billion across 200 deals during the same quarter the previous year. Meanwhile, the e-way (electronic way) bill system under Goods and Services Tax (GST) for inter-state movement of goods has come into force from April 1, with over 1.7 lakh electronic invoices expected to have generated on the first day of the rollout aimed at curbing tax evasion by traders and transporters. Finally, the BSE Sensex surged 286.68 points or 0.87% to 33,255.36, while the CNX Nifty was up by 98.10 points or 0.97% to 10,211.80.