Markets to make pessimistic start on feeble global cues

Indian markets ended largely unchanged on Tuesday tracking mixed global cues. Today, the markets are likely to make pessimistic start tracking weak global cues, following U.S. President Donald Trump’s decision to withdraw from a landmark nuclear deal with Iran. Sentiments will remain dampen on report that India slipped to the 6th position globally in the business optimism index for the first quarter of this year. Business optimism is however at an all-time high globally with the index at net 61 per cent, the highest figure recorded in 15 years of research. Traders will also weigh private report that India missed out on a synchronized global recovery in 2017 even as the economy recovers from the structural shocks of GST and demonetization. Meanwhile, the government will come out with a Producers Price Index (PPI) next month for 10 services including telecom and railways on experimental basis. The move will help track inflation in these services, which will also include ports, postal, insurance, banking, transportation and air travel. Traders will get some respite later in the day as Commerce and Industry Minister Suresh Prabhu asked various departments and ministries to submit in a fortnight their respective action plans to boost exports. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended mixed on Tuesday as investors weighed the Trump administration’s decision to withdraw from a 2015 nuclear deal with Iran and reinstate sanctions on the country. Asian stocks were trading lower on Wednesday following President Donald Trump’s announcement that the U.S. would pull out of the Iran nuclear deal, with most markets posting slight declines in morning trade.

Back home, Indian equity benchmarks ended the volatile day of trade on quiet note on Tuesday, as traders remained on sidelines ahead of Karnataka elections whereby the market participants expect a victory for the BJP in the upcoming elections. Markets started the session on an optimistic and traded firmly for most part of the day as traders took some encouragement from ICRA’s report which highlighted that the estimated surge in states’ borrowings in the first quarter do not reflect a deterioration of their financial health as it is driven more by the changes in central devolution. The report added that the planned increase in SDL (state development loans) issuance in Q1 of FY19 should not be construed as an indicator of a sharp fiscal deterioration of the states’ fiscal health. Some support also came with Reserve Bank of India reportedly intervening in the currency markets to prevent a further slide in the Indian rupee, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Meanwhile, a private report highlighted that India is projected to have a skilled labour surplus of 245 million workers by 2030, mainly on the back of vast supply of working age citizens, even as most of developed and developing economies are expected to grapple with talent crunch at that time. Sentiments remained positive with finance ministry’s statement that World Bank will provide a $200 million loan to help the government achieve its goal of reducing stunting in children 0-6 years of age from 38.4 per cent to 25 per cent by the year 2022. However, markets pared almost all of their gains and turned volatile on UN’s report that the Goods and Services Tax (GST) as well as protracted issues of corporate and bank balance sheet problems pushed India’s economic growth downward in 2017 but a gradual recovery is expected and the country’s economy is forecast to grow at 7.2 percent in 2018. Traders also remained worried with private report stating that India has said that the US move to impose higher tariffs on steel and aluminium products on grounds of national security are an abuse of global trade provisions that could spiral into a trade war. Finally, the BSE Sensex rose 8.18 points or 0.02% to 35,216.32, while the CNX Nifty was up by 2.30 points or 0.02% to 10,717.80.