Markets to make cautious start as Syria concerns linger

Indian shares extended their winning streak to a seventh straight session on Friday as investors digested positive macro data and looked ahead to Infosys' earnings for directional cues. Today, the markets are likely to make a cautious start, as geopolitical concerns linger and focus gradually shifts to corporate earnings. Traders will also remain concern with report that India’s merchandise exports fell for the first time in five months in March and the trade deficit widened amid concerns over global trade and US moves to review a programme allowing duty-free imports of goods. India’s merchandise exports in March fell 0.7 per cent year-on-year to $29.1 billion, and the trade deficit widened to $13.7 billion. Imports rose 7.2 percent on year to $42.8 billion in March. However, traders will get some support later in the day on World Economic Forum’s (WEF) report that India is well positioned to play a key role in shaping the global fourth industrial revolution with a young labour force, a large English-speaking population and the second largest numbers of internet users. Some support may also come with Asian Development Bank’s (ADB) statement that India can achieve over 8 per cent growth rate in a sustained manner if it takes steps to revive investments and make exports competitive. Infosys will be in focus after the IT major met Street expectations on financial numbers for the January-March quarter as well as for 2017-18. But the firm’s revenue growth guidance for 2018-19, especially the projection on operating margin, disappointed investors.

The US markets ended in red terrain on Friday as buying interest waned shortly after the open with traders turning reluctant to make significant moves ahead of a slew of earnings news next week. Asian markets were trading mixed on Monday, as investors digested the softer close on Wall Street and geopolitical tensions on the back of U.S. led airstrikes on Syria last week.

Back home, Indian equity benchmarks extended the winning streak for seventh straight session with frontline gauges ending near their crucial 33,200 (Sensex) and 10,500 (Nifty) levels, as better than expected macro-economic data painted a positive picture of the economy. Markets started the session on an optimistic note with report that India’s industrial output grew 7.1% year-on-year in February, bigger than the expected 6.8% expansion. The cumulative growth for the period April-February 2017-18 over the corresponding period of the previous year stood at 4.3%. India’s Consumer Price Index (CPI) for the month of March came to 4.28% as compared to 4.44% in February. CPI food inflation for March also eased substantially to 2.81% versus 3.26% in last month. Traders also took some encouragement with report that the Confederation of Indian Industry (CII) is expecting India’s gross domestic product (GDP) to grow at 7.3-7.7% during the 2018-19 financial year. This is based on strengthening demand in the rural economy, including agriculture and non-farm activities, as well as better global growth climate. However, some profit booking was seen in second half of trade with market participants paring most of their gains as some concerns came with former RBI governor Raghuram Rajan’s statement that he made it quite clear to the government that demonetisation was ‘not a good idea’ and that its implementation was not well-planned since 87.5% of the currency was being demonetised. However, markets managed to end the session in green, as some support came with global rating agency, Moody’s Investors Service in its latest report stating that the pick-up in India’s GDP growth rate is optimistic for asset-backed securities (ABS), because such growth will support the ability of borrowers to earn income and repay loans backing ABS deals, including auto loans and loans against property to micro, small and medium enterprises (MSMEs). Finally, the BSE Sensex surged 91.52 points or 0.27% to 34,192.65, while the CNX Nifty was up by 21.95 points or 0.21% to 10,480.60.