Markets to make positive start on firm global cues

Indian equity markets fell slightly on Wednesday to snap a nine-day winning streak even as global markets remained buoyant amid easing geopolitical and trade tensions. Today, the markets are likely to make an optimistic start amid firm global cues. Traders will take some support with International Monetary Fund’s (IMF) statement that the debt level is relatively high in India, but the authorities are planning to bring it down over the medium term with the right policies. In fiscal year 2017-18, India is planning to continue with the consolidation in the current fiscal year and over the medium term. However, there will be some anxiety among investors with former finance minister P Chidambaram’s statement that the ghost of demonetisation has come back to haunt the government and alleged that the Rs 2,000 notes were printed only to help hoarders. In the wake of cash crunch in some parts of the country, he also said there was a possibility that people have lost confidence in the banking system due to the bank scams and they were not putting their surplus money into the banks. There will be buzz in export related stocks after Commerce and Industry Minister Suresh Prabhu exporters of taking up the issue of GST refund with the finance ministry and said he plans to call a ministerial meeting to discuss export related issues. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended mostly higher on Wednesday after the Fed said economic activity continued to expand at a modest to moderate pace across the twelve districts in March and early April. It also said the economic outlooks remains positive but noted contacts in various sectors. Asian markets were rallying with oil prices at 3½-year highs helping to boost sentiment for the region’s equities.

Back home, snapping nine day winning streak, Indian equity benchmarks ended the Wednesday’s trade slightly in red, as traders opted to book some of their profit after nine sessions of continuous rally amid lack of any major domestic cues. Also, investors eyeing for corporate earnings to get further market direction. Markets started the session on an optimistic note and traded in fine fettle for most part of the day, as traders took some encouragement with International Monetary Fund’s (IMF) statement that India’s GDP growth will accelerate in the current and next fiscal years as structural reforms raise potential output. GDP is forecast to grow 7.4% in the current fiscal from 6.7% in FY18 and accelerate further in FY20 to 7.8%. Market participants also got some support with Union Minister Suresh Prabhu’s statement that the government is working with the US to resolve all trade issues even as America has decided to review India’s eligibility to enjoy duty-free access for certain products under a tax benefit scheme. Meanwhile, the group of ministers (GoM) on Tuesday worked out a revamped return for goods and services tax (GST) to help ease the burden on businesses. Domestic sentiments were upbeat with a report stating that India recorded the biggest rise of 73% in investment proposals into France among emerging economies in 2017, as there were 19 Indian foreign investment projects in France. However, profit booking in last leg of trade played spoil sports for the domestic markets which dragged the key indices slightly in red. Anxiety spread among the investors with a private report that India’s economy will be hit hard by a combination of a global tariff war and the US Federal Reserve’s monetary tightening cycle. The report noted that a tariff war will reduce exports and lead to imported inflation, which will hurt Indian purchasing power and investments. Some concerns also came with a report highlighting that though the GST implemented by the government in July last year has simplified the tax regime and resolved some long-standing issues such as valuation and tax type for the real estate sector, the consumers might not see a significant reduction in property prices just yet. Finally, the BSE Sensex shed 63.38 points or 0.18% to 34,331.68, while the CNX Nifty was up by 22.50 points or 0.21% to 10,526.20.