Markets to start on pessimistic note on feeble global cues

Indian stock market ended flat on Friday, with a largely negative trend in global markets and speculation about a rate hike by RBI prompting investors to tread cautiously. Today, the markets are likely to make negative start amid weak global cues. Traders will also remain on sidelines ahead of an informal meeting between Prime Minister Modi and China’s Xi Jinping and developments around the impeachment notice against Chief Justice of India Dipak Misra. However, traders will get some support later in the day with Reserve Bank of India (RBI) Governor Urjit Patel’s statement that India’s real GDP growth is expected to expand at 7.4 per cent in 2018-19, with risks evenly balanced. HE added that several factors are expected to help accelerate the pace of growth in 2018-19. There are now clearer signs that the revival in investment activity will be sustained. Some support will also come with Economic Affairs Secretary Subhash Chandra Garg’s statement that India is poised to remain as the fastest growing large economy in the world. In 2018, we expect India to grow at over 7.4 percent. He added that India’s GDP is expected to reach a volume of $5 trillion by FY2025 by leveraging on digitisation, globalisation, favourable demographics and structural reforms. Meanwhile, IMF said Global investors feel that the Indian elephant is ready to run after sustained economic reforms. There will be buzz in stocks related to steel sector on report that India’s crude steel output is expected to soar by 38 per cent to 140 million tonnes (MT) by the end of this year. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended lower on Friday as traders remained on sidelines ahead of on reports on new and existing home sales, consumer confidence, durable goods orders and first quarter GDP. All the Asian markets were trading in red as investors kept an eye on rising U.S. Treasury yields and digested declines in technology stocks seen stateside.

Back home, Indian equity benchmarks ended the choppy day of trade flat with negative bias as minutes of the central bank’s policy panel meeting stoked expectations of an interest rate hike. After making a cautious start, markets traded in red terrain for most part of the day as sentiments remained dampened 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. Sentiments also remained dampened after RBI’s MPC members flagged several concerns, including an increase in minimum support prices for farmers and high and volatile crude oil prices. Market participants also remained concerned with former finance minister Yashwant Sinha’s statement that the cash crunch at ATMs in some parts of the country is a case of complete mismanagement on the part of both the RBI and the government. He said the magnitude of the crisis is huge and the Reserve Bank did not have a backup plan to deal with such a situation. Investors took note of report that, All India Bank Employees Association (AIBEA), representing the banking industry said that concrete action is required by the Reserve Bank to address the cash crunch and warned of a protest on the issue. However, markets pared almost all of their early losses in last leg of trade with traders getting some solace with the private 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. The report added that there were 59 PE transactions worth $1.3 billion in March this year, while in the corresponding period last year it stood at $888 million by way of 70 deals. Investors also got some comfort with private report showing that India has been recording the highest growth rate amongst the Brazil, Russia, India, China and South Africa (BRICS) economies. The report highlighted that in spite of some reformative steps that slowed the growth momentum in the first quarter of FY18, the economy is likely to grow at 7.4 per cent in 2018 -- higher than the advanced economies and the world -- which are at 2 per cent and 3 per cent respectively. Finally, the BSE Sensex shed 11.71 points or 0.03% to 34,415.58, while the CNX Nifty was up by 1.25 points or 0.01% to 10564.05.