Markets likely to make pessimistic start on weak global cues

Indian equity markets ended modestly higher on Thursday as a surge in commodity prices helped in lifting mining stocks and investors remained optimistic about the ongoing earnings season. Today, the markets are likely to make negative start start amid weak global cues. Traders will also remain concern with IMF chief Christine Lagarde’s statement that she does not expect the pace of economic reforms in India to continue in an election year. Traders will get some support later in the day with Chief Economic Adviser Arvind Subramanian’s statement that the India-US ties have been extremely well on the strategic and defence fronts but the relationship cannot realise its full potential without stronger economic bond. Some support will also come with report that PE investments witnessed a robust 46 per cent jump in deal values at $1.3 billion in March, taking the total tally for the first quarter of 2018 to $4 billion, up 76 per cent over the same period a year ago. Traders will also get some solace with report that India will claim the top spot among the world’s fastest-growing major economies this year, but rising trade tensions between the United States and China may restrain that growth. Meanwhile, India and Mauritius today concluded the second round of negotiations for the proposed free trade agreement (FTA), aimed at boosting bilateral trade and investments. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended lower on Thursday despite the Labor Department releasing a report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended April 14th. Asian markets were trading mostly in red after two days of broad gains, with technology stocks leading the way following a downbeat outlook from Taiwan Semiconductor Manufacturing Company.

Back home, Indian equity benchmarks resumed northward journey after a day’s break and ended in green terrain with frontline gauges recapturing their crucial 34,400 (Sensex) and 10,550 (Nifty) levels. Markets traded in green terrain throughout the session as traders took some encouragement 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. Also, IMF in its Fiscal Monitor report titled ‘Capitalising on Good times’, said that India should now fully implement the new nationwide indirect tax to avoid tax revenue underperformance resulting in cuts to capital expenditures. Traders also took some support from a private poll which showed that India will claim the top spot among the world’s fastest-growing major economies this year, but rising trade tensions between the United States and China may restrain that growth. The recent tit-for-tat import tariffs imposed by the US and China have raised concerns about a full-fledged global trade war which could throw an otherwise-strong world economy off-course. The latest poll, taken April 11-18, predicted India’s economy will expand 7.4 percent in the fiscal year that began this month. Markets also got some support with a private report stating that the Reserve Bank of India is expected to go for a 25 basis points rate cut in key rates, due to normal monsoon forecast from Indian Meteorological Department. Traders shrugged off 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. Finally, the BSE Sensex surged 95.61 points or 0.28% to 34,427.29, while the CNX Nifty was up by 39.10 points or 0.37% to 10,565.30.