Markets to make pessimistic start on geopolitical concern

Indian equity markets eked out modest gains on Wednesday despite rising oil prices and mounting tensions in the Middle East. Today, the markets are likely to make negative start tracking weak global cues amid geopolitical tensions. Investors will remain on sidelines ahead of macroeconomic readings on inflation and industrial output due today and Infosys’ quarterly earnings scheduled to be released on Friday for clues about near-term direction of markets. Traders may get some support with report that India has jumped 13 places in the last one year to be earn 130th spot in the latest annual Index of Economic Freedom released by a top American think-tank. In 2017, India with a score of 52.6 points was ranked at 143 among 180 countries, two spots below neighbour Pakistan. Some support may also come with report that FDI inflows have increased by 34% to an average of $10.2 billion quarterly since the NDA-government assumed power in 2014. The report notes that FDI inflows in India have nearly doubled to $42 billion in FY17. There will be buzz in banking stocks after the Reserve Bank has ruled out any relaxation in bad loan rules, saying the tough norms will discipline borrowers and prevent banks from pushing distressed loans under the carpet

The U.S. stocks edged lower on Wednesday amid geopolitical concerns after President Donald Trump warned Russia get ready for missiles being launched at Syria. On the U.S. economic front, the Labor Department released a report showing a modest decrease in consumer prices in the month of March. Asian stocks are trading sideways on Thursday, as investor confidence seen earlier in the week wavered overnight amid geopolitical tensions.

Back home, Indian equity benchmarks ended the Wednesday’s trade slightly in green, extending their winning streak for fifth straight day. Markets started the session on cautious note and entered into red terrain in first half of the trade, as traders remained cautious ahead of quarterly earnings this week, with IT major Infosys likely to declare its March quarter results on April 13. Traders also remained watchful ahead of industrial output figures for February and retail inflation data for March slated to be released on April 12. Sentiments also remained down beat on foreign brokerage report that the trend of earnings downgrade for Indian equities that began three years ago is not showing signs of abating despite growth in the three quarters to December 2017. The report highlighted that the consensus estimate for the earnings per share (EPS) of the MSCI India index for 2018 is lowered by 10.3% since December 2016. On the other hand, the EPS estimate of the MSCI Asia ex-Japan index has increased by 13.6%. However, bourses pared all of their losses and entered into green terrain in last leg of trade to end with marginal gains as traders took some encouragement with Asian Development Bank’s report that India is expected to bounce back to 7.3% in fiscal 2018 and firm to 7.6% in 2019 as the new tax regime improves productivity and as banking reform and corporate deleveraging take hold to reverse a downtrend in investment. Some support also came 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 comfort also came with the commerce ministry’s statement that the government is working on an action plan to increase the growth rate at the district level by 3-4% per annum by accelerating economic activities. Finally, the BSE Sensex gained 60.19 points or 0.18% to 33,940.44, while the CNX Nifty was up by 14.90 points or 0.14% to 10,417.15.