Markets likely to make mildly positive start

Indian markets ended a choppy session slightly higher on Tuesday even as global markets succumbed to selloff amid jitters about US - Chinese trade tensions and mounting public scrutiny of technology companies. Today, the markets are likely to open slightly in green on Wednesday. Traders will be taking some encouragement with Finance Minister Arun Jaitley’s statement that direct tax collection has grown by 18 per cent to cross Rs 10.02 trillion in the financial year ended on March 31, 2018. He said demonetisation and GST implementation have resulted in higher formalisation of the economy which is evident from additional 10 million IT returns being filed in the previous financial year. However, there will be some concern on report that the Reserve Bank of India (RBI) is unlikely to yield to the India Inc’s pressure for a benign monetary policy stance by keeping policy rates unchanged in its first monetary policy review of 2018-19 to be announced on Thursday against the backdrop of hardening global crude oil prices. There will be buzz in sugar related stocks on report that sugar output increased 49 per cent to 28.18 million tonne (MT) so far in 2017-18 marketing year, but mills are unable to make cane payment to growers owing to low prices. Stocks related to tea sector too will be buzzing on a private report that Profit margins for bulk tea producers, particularly in north India, is likely to improve in the just-concluded financial year on firm price trends from August 2017 to January 2018.

The US markets ended higher on Tuesday as bargain hunting contributed to the strength on Wall Street, with traders picking up stocks at reduced levels after the sharp decline seen on Monday. Asian markets are trading mixed in early deals as recent concerns over trade tensions persisted amid new China-U.S. trade developments.

Back home, extending previous session’s gains, Indian equity benchmarks ended the Tuesday’s trade with a gain of one third of a percent. Markets started the session on cautious note and entered into red terrain in morning deals with escalating trade tensions between the US and China. Investors also remained on sidelines 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 also remained concerned 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. Adding to the pessimism, India’s manufacturing sector activity expanded at its slowest pace in the month of March to fall at 5-month low. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - slowed down to 51.0 in March from 52.1 in February. However, markets took U-turn and started paring losses to enter into green terrain in last leg of trade with traders taking support from report that the government’s revenue collection during fiscal year 2017-18 gone up by 17.1% at Rs 9.95 lakh crore, supported by the addition of one crore new assessees who have started filing income tax returns. Traders also took some solace 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. Market participants also drew some support with Finance Secretary Hasmukh Adhia’s statement that the government is on the course of meeting the fiscal deficit target of 3.5% of gross domestic product (GDP) for 2017-18. He added that this will be aided by buoyant tax collections, especially on the direct tax side coupled with Goods and Services Tax (GST) collections and natural savings by ministries. Finally, the BSE Sensex surged 115.27 points or 0.35% to 33,370.63, while the CNX Nifty was up by 33.20 points or 0.33% to 10,245.00.