Markets to make flat- to-negative start

Indian stock markets edged higher on Monday as tensions in the Korean Peninsula faded after a spectacularly successful inter-Korean summit. Today, the markets are likely to make flat- to-negative start as investors looked ahead to a slew of U.S. data releases this week for hints on the interest rate outlook. Traders will react negatively on report that the eight core industries’ output growth slowed to three-month low of 4.1 per cent in March, largely due to some base effect and contraction in crude oil production. The latest print was lower than the revised 5.4 per cent growth in February and 6.1 per cent in January. Also, the December 2017 print for core eight industries has been revised downwards to 3.8 per cent from 4.2 per cent projected earlier. However, markets may get some support later in the day on report that the government mopped up over Rs 1 trillion in GST collection in April, indicating stabilisation of the new indirect tax regime which was rolled out on July 1 last year. While Goods and Services Tax (GST) collection in entire 2017-18 stood Rs 7.41 trillion, in March the figure was Rs 892.6 billion. Traders will also get some support with Union Minister Suresh Prabu’s statement that India, driven by a new industrial policy to be rolled out soon, will be the next engine of growth for the world. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended mostly in green on Tuesday after the Institute for Supply Management released a report showing growth in manufacturing activity slowed by more than anticipated in the month of April. Asian stocks are trading lower in early deals on Wednesday, after most overseas benchmarks saw little change the previous day.

Back home, extending northward journey for third straight session, Indian equity benchmarks ended the Monday’s trade with a gain of around half a percent with frontline gauges recapturing their crucial 35,100 (Sensex) and 10,700 (Nifty) levels, as tensions in the Korean Peninsula eased after a spectacularly successful inter-Korean summit. Markets started the session on an optimistic note and traded in tight band throughout the session. Sentiments remained upbeat with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India’s economy to grow by at least 7.5 per cent in 2018-19 on the back of improvement in investment cycle and capacity utilisation. The government should now concentrate on consolidating the reform initiatives undertaken in the last 47 months, he added. Traders also took some encouragement with report stating that the Reserve Bank of India (RBI) is withdrawing a restriction that limited foreign investors to only investing in government and corporate bonds with tenures of three years or more, a move that could bolster the domestic bond market. Some support came with Economic Affairs Secretary Subhash Chandra Garg’s  statement that the process of economic reforms is still continuing in reasonably major way and noted that there are no signs of de-reform in the system. Meanwhile, Fitch has kept India’s rating unchanged with a stable outlook, saying the rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment. Some optimism also came with report that the Centre has a surplus of Rs 20,000 crore in the GST cess fund as of March 31 which will be used to compensate the states for revenue shortfall suffered due to the roll out of the Goods and Services Tax. Finally, the BSE Sensex surged 190.66 points or 0.55% to 35,160.36, while the CNX Nifty was up by 47.05 points or 0.44% to 10,739.35.