Markets likely to make optimistic start on firm global cues

Indian shares rose for a fourth consecutive session on Tuesday as global cues remained well supported on increased hopes that a full-blown war between the U.S. and China could be averted. Today, the markets are likely to make positive start tracking firm global cues. Traders will take some encouragement with World Economic Forum’s (WEF) statement that India can play a pivotal role in shaping the global fourth Industrial revolution as over half of its population is under the age of 27. The WEF has already partnered with the Indian government to set up the Centre for the Fourth Industrial Revolution India in Mumbai. Some support will also come with report that the Reserve Bank continued to remain a net purchaser of the US currency in February after it had bought $1.665 billion from the spot market. During the month, the central bank bought $3.320 billion, while it sold $1.655 billion in the spot market. Meanwhile, the government is considering converting GST Network- which is handling the IT infrastructure of the new indirect tax regime - into a state-owned company. Currently, private financial institutions are the majority owners in GSTN with 51 percent stake, while the centre and states together hold 49 percent. Traders will remain concern with report that Fitch Ratings downgraded the viability rating of Punjab National Bank (PNB) to ‘BB-’from’BB’, saying that fraudulent transactions will affect the bank’s financials, including its earnings and core capitalization.

The U.S. stocks edged higher on Tuesday as traders reacted positively to comments from Chinese Xi Jinping regarding the trade dispute between China and the U.S. Xi promised to lower import tariffs on products including cars and take other steps to further open the world’s second-largest economy. Asian markets are trading mostly in green tracking strength overnight in the U.S. and Europe as Chinese President Xi Jinping’s comments eased concerns about a trade war and calmed the market.

Back home, extending winning streak for fourth straight session, Indian equity benchmarks ended the Tuesday’s trade in green terrain with frontline gauges recapturing their crucial 10,400 (Nifty) and 33,800 (Sensex) levels. Markets traded in green throughout the session but in a tight band. Sentiments remained up-beat since beginning, as traders bet for improved corporate earnings and acceleration in economic growth, with readings on industrial production and retail inflation due on Thursday. Traders took some encouragement with Commerce and Industry Minister Suresh Prabhu’s statement that India can benefit from the ongoing challenges in global trade provided it plays its cards well. He said, “We are passing through a challenging but an opportune time. If we play our cards properly, and that is what we are trying to do we can actually benefit from it by creating an opportunity around the issues that are happening globally and we have no choice but to respond in a positive manner”. Investors took note that in a major boost to infrastructure development in the north-east, NITI Aayog will soon hold a high-level meeting to chalk out strategies for improving road, rail and air connectivity in the regions besides focusing on improving hydel power production and organics farming in the states. Traders took some support with private report showing that FPI investment limits in central government securities for general and long term investors have been increased by Rs 59,200 crore or over $9 billion to a total of Rs 3.15 lakh crore till the end of FY19. Some support also came after Prime Minister Narendra Modi gave a 100-day deadline to the heads of central public sector enterprises (CPSEs) to come out with a roadmap with ‘measurable targets’ for strengthening state-owned companies and promoting development activities. Modi also suggested that their CSR spend should be focused largely on one specific theme each year. Finally, the BSE Sensex surged 91.71 points or 0.27% to 33,880.25, while the CNX Nifty was up by 22.90 points or 0.22% to 10,402.25.