Markets to make flat to positive start

Indian shares rose for an eighth straight session on Monday as fears of a wider escalation in the Middle East faded following the weekend’s U.S.-led strike. Today, the markets are likely to make a flat-to-positive opening amid firm global cues but investors keep a wary eye on geopolitical tensions and oil price movements. Traders will get some respite on the monsoon front as the India Meteorological Department (IMD) forecast that the country will receive normal monsoon for a third consecutive year. Traders will get some encouragement with the World Bank forecasting a growth rate of 7.3 per cent for India this year and 7.5 per cent for 2019 and 2020, and noted that the country’s economy has recovered from the effects of demonetisation and the Goods and Services Tax. The World Bank also said that India should strive to accelerate investments and exports to take advantage of the recovery in global growth. Meanwhile, Niti Aayog Vice Chairman Rajiv Kumar said there is a need for close coordination between the finance ministry and the Reserve Bank. He said the 3.5 percent fiscal deficit target, which deviates from the original fiscal consolidation road map, is not very big and affirmed that India is better placed on other macro-economic indicators like inflation, forex reserves and the current account gap.

The US markets ended higher on Monday as traders reacted positively to earnings news from financial giant Bank of America (BAC), which reported first quarter earnings that beat analyst estimates on strong loan growth. Asian markets were trading mostly in green on the back of release of better-than-expected China GDP. China’s economy grew 6.8 percent in the first quarter of 2018.

Back home, Indian equity benchmarks continued winning streak and once again ended in green for the eighth day in a row, with frontline gauges recapturing their crucial 34,300 (Sensex) and 10,500 (Nifty) levels. Markets started the session on pessimistic note as geopolitical concerns linger and focus gradually shifts to corporate earnings. Traders also remained concerned 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% year-on-year to $29.1 billion, and the trade deficit widened to $13.7 billion. Imports rose 7.2% on year to $42.8 billion in March. Sentiments also weighed down on report that investments through Participatory notes (P-notes) plunged to nearly nine-year low of Rs 1.06 lakh crore in the capital market at March-end amid stringent norms put in place by the regulator SEBI to check misuse of these instruments. According to the SEBI data, total value of P-note investments in Indian markets -- equity, debt, and derivatives -- slumped to a low of Rs 1,06,403 crore at March-end from Rs 1,06,760 crore at the end of the preceding month. Prior to that, the figure was Rs 1.19 lakh crore. Markets pared all of their losses to enter into green terrain with report highlighting that India’s inflation on wholesale level softened slightly in the month of March, in line with easing retail inflation, aided by fall in prices of food articles, mainly pulses and vegetables. The Wholesale Price Index (WPI)-based inflation came in at 2.47% for March 2018, the lowest since July 2017. Some support also came with Indian Meteorological Department’s (IMD) statement that the south-west monsoon is likely to be 97% of the long period average (LPA), implying normal summer rains. Skymet, a private forecasting agency, has also predicted normal monsoon this year. The Met will release its next official forecast in June. Adding to the optimism, Asian Development Bank (ADB) said that India can achieve over 8% growth rate in a sustained manner if it takes steps to revive investments and make exports competitive. Finally, the BSE Sensex surged 112.78 points or 0.33% to 34,305.43, while the CNX Nifty was up by 47.75 points or 0.46% to 10,528.35.