Markets likely to make flat-to-positive start

Indian markets eked out modest gains on Wednesday as investors remained hopeful that the Iran nuclear deal will remain partially intact, even without the United States. Today, the markets are likely to make flat-to-positive start. Traders will get some support with India Ratings’ report that the Indian economy is gradually coming out of the twin shock of demonetisation and GST which temporarily derailed growth. The ratings agency, however, cautioned on the possible widening of the current account deficit (CAD) due to rising oil prices which was creating pressure on the currency. However, there will be some concern with Assocham’s statement that President Donald Trump’s announcement of the US pulling out from the Iran deal and his decision to re-impose sanctions on the key crude oil producer will exert pressure on fuel prices and affect the Indian economy on the downside. Meanwhile, a private report stated that the income-tax returns filed for financial year 2017-18 has dipped by over 60 per cent in April 2018, but neither the IT Department nor the Centre is unduly worried. Stocks related to insurance sector will be in focus on report that the government is considering allowing 100 per cent foreign direct investment (FDI) in insurance intermediaries with a view to give a boost to the sector and attracting more funds. There will be some important earnings announcements too, to keep the markets buzzing

The US markets ended in green on Wednesday partly due to a sharp increase by the price of crude oil following President Donald Trump’s decision to withdraw from the Iran nuclear deal. Asian stocks markets were trading mostly higher on Thursday, with energy shares leading the way as crude oil prices bolted higher.

Back home, extending winning streak for third straight day, Indian equity benchmarks ended the Wednesday’s trade with a gain of over quarter a percent. Markets started the session on pessimistic note with 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%, the highest figure recorded in 15 years of research. Sentiments also remained dampened with a private report stating that India missed out on a synchronized global recovery in 2017 even as the economy recovers from the structural shocks of Goods and Services Tax (GST) and demonetization. Some cautiousness also prevailed on a survey showing that touching a four-year low, optimism level among Chief Financial Officers about the country’s financial and macro-economic conditions for the second quarter of this year has declined nearly 18%. The composite CFO Optimism Index declined 17.8%, on a quarter-on-quarter basis, to 96.2 for the second quarter of 2018. However, markets gained momentum and entered into green terrain with traders turning optimistic on International Monetary Fund’s (IMF) report reaffirming that India will be the fastest growing major economy in 2018, with a growth rate of 7.4% that rises to 7.8% in 2019 with medium-term prospects remaining positive. The IMF’s Asia and Pacific Regional Economic Outlook report said that India was recovering from the effects of demonetization and the introduction of the GST and the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption. Sentiment on the street remained positive with a report stating that India’s economy is forecast to grow at 7.2% in 2018 and private investment in India is expected to revive as the corporate sector adjusts to GST, infrastructure spending increases and corporate and bank balance sheets improve with government support. Finally, the BSE Sensex surged 103.03 points or 0.29% to 35,319.35, while the CNX Nifty was up by 23.90 points or 0.22% to 10,741.70.