Markets to make pessimistic start amid feeble global cues

Indian markets ended flat on Tuesday on account of disappointing economic report that showed the pace of growth in eight core sectors to have slowed to a 3-month low in March. Today, the markets are likely to make pessimistic start, mirroring mixed cues from global markets after the U.S. Federal Reserve sprang no surprises with its latest policy statement. Sentiments will remain dampen on report that India has slipped by three spots to eleventh position in the FDI Confidence Index 2018 released by American global management consulting firm AT Kearney. India falls by three spots, reversing its two-year streak of rising in the rankings. The report also said that India fell out of the top 10 for the first time since 2015. Traders will get some support later in the day with report that Economic growth in India is expected to strengthen to 7.3 percent in financial year 2018-19 on the back of robust activity from construction, manufacturing, and services sectors. Telecom stocks will remain in focus after the government unveiled a new draft policy for the telecom sector branded as National Digital Communications Policy 2018 that proposes broadband access for all with 50 mbps speed, 5G services and 40 lakh new jobs in the sector by 2022. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended lower on Wednesday after the Fed’s comments about inflation, which signaled that an interest rate hike is likely in June. All the Asian markets are trading in red in early deals on Thursday, ahead of anxiously-awaited U.S.-China trade talks. The talks between US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are due to kick off later on Thursday, but a breakthrough deal is viewed as highly unlikely.

Back home, Wednesday turned-out to be a quiet day of trade for Indian equity benchmarks with frontline gauges ending almost flat, as traders remained anxious eyeing ongoing result season and ahead of Federal Reserve meeting outcome tonight. Markets altered between green and red throughout the session and traded mostly near neutral lines, as traders remained cautious 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. Traders also remained cautious with Moody’s Investors Service’s latest report stating that the Reserve Bank of India’s (RBI) push to banks to recognize problem assets more accurately will reduce profitability of banks in the near term. It said that increased provisioning will hurt the banks' profitability, and weaker public sector banks (PSBs) in particular will continue to report losses in the next fiscal year (FY19), adding pressure on their capital ratios. However, market participants got some respite with a report highlighting that the Indian manufacturing activity expanded further in April, on the back of faster expansions in output and new orders, signaling a faster improvement in business conditions across the country’s goods-producing sector compared to the previous March month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 51.6 in April from 51.0 in March. Some solace also came with report stating 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. Some support also came 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. Auto stocks remained in top gear after companies released April month sales number. Finally, the BSE Sensex rose 16.06 points or 0.05% to 35,176.42, while the CNX Nifty was down by 21.30 points or 0.20% to 10718.05.