Markets likely to make pessimistic start

Indian markets rallied on Thursday as trade-war worries eased and the RBI left its key interest rates unchanged for the fourth straight meeting. Today, the markets are likely to make pessimistic start after U.S. President Donald Trump ordered his administration to consider tariffs on a $100 billion worth of Chinese imports, dashing hopes for a cooling of trade tensions. However, markets may get some support later in the day after the finance ministry welcomed the Monetary Policy Committee’s (MPC) projection of higher GDP growth and lower inflation in the current fiscal. The MPC’s growth projection of 7.4 percent is in line with the Economic Survey. Traders may get some support with private report that Indian services sector climbed back into expansion zone in March, helped by the flow of new work, encouraging companies to hire at the fastest pace in seven years. There will be buzz in Fast moving consumer goods (FMCG) related stocks on report that FMCG firms are expected to post a net revenue growth of 11.8 percent in the March quarter, highest in the past 18 quarters, on acceleration in volume growth, GST-led savings and higher leverage benefits. Gems & Jewellery stocks too will be buzzing after Gems and jewellery council has set a target of $100 billion by 2025 for the domestic gems and jewellery sector. Stocks related to fertilisers space will also be buzzing on report that the demand for fertilisers in the first half of the current financial year is likely to remain stable on the outlook for normal monsoon and higher farm income.

The US markets closed higher for the third straight day on easing concerns about a potential trade war between the U.S. and China. Asian stocks are trading mixed on Friday, as the overnight rally on Wall Street failed to translate after President Donald Trump indicated that more tariffs against China could be in the works.

Back home, Thursday turned out to be a remarkable day of trade for Indian equity benchmarks where bulls went brisk on Dalal Street, with Nifty conquering its crucial 10,300 level, while Sensex ending just shy of 33,600 mark after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6% in the first Monetary Policy Committee (MPC) meet of FY19. Sentiments remained up-beat since beginning of the trade as markets started the session with a gap-up opening, as investors welcomed signals the US and China are open to negotiations rather than escalating threatened tit-for-tat trade tariffs. Traders took some encouragement with report that the trade deficit between India and the US dropped by almost six per cent in 2017 compared to the previous year, even as it continued to harp on issues such as market access and high tariffs on several American products being imported into India. Some support also came from NITI Aayog CEO Amitabh Kant’s statement that the government has been able to save Rs 83,000 crore through direct benefit transfer (DBT) scheme. He said that advantages of digitization are so enormous in making India a progressive, effective society. Markets extend rally in last leg of trade after RBI on expected lines kept the repo rate unchanged at 6% in its First Bi-monthly Monetary Policy Review, 2018-19. Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) remained at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25% each. This is the fourth time when the RBI maintained status quo on repo rate. Meanwhile, the central bank has projected the India’s Gross Domestic Product (GDP) growth to strengthen to 7.4% in 2018-19 from 6.6% in 2017-18. Traders also took some encouragement with private weather forecasting agency Skymet’s forecast that Monsoon in India is likely to be normal with no chances of drought this year. The forecaster said there were 5% chances of excess rainfall that is more than 110% of long-period average (LPA). The average, or normal, rainfall in the country is defined between 96 and 104% of a 50-year average for the entire four-month monsoon season. Finally, the BSE Sensex surged 577.73 points or 1.75% to 33,596.80, while the CNX Nifty was up by 196.75 points or 1.94% to 10,325.15.