Markets likely to make positive start tailing firm Asian markets

Indian equity benchmarks ended lower for a fourth straight session on Friday as sustained selling by foreign investors in recent sessions, rising crude oil prices and concerns about near term outlook for the economy weighed on sentiment. Today, the markets are likely to start slightly in green tailing firm Asian peers. Sentiments will get some support with economic affairs secretary Subhash Chandra Garg’s statement that India's growth trajectory continues to be stable with strong macroeconomic fundamentals, despite a continual rise in global oil prices and hardening bond yields. He said, the fiscal deficit programme has been going on very smoothly and there has been no reason for us to believe that there will be any greater impact. Traders will also get some support with report that India is the sixth wealthiest country in the world with a total wealth of $8,230 billion, while the US is the richest nation globally. However, there will be some concern on report that even as monsoon is predicted to be normal this year, its uneven distribution could spike food prices, and inflation is likely to edge further. There will be buzz in banking counters as the finance ministry expects banks to write back more than Rs 1 lakh crore after the resolution of all 12 NPA cases referred to insolvency proceedings by the RBI it its first list. Meanwhile, Indostar Capital Finance, which recently concluded its initial public offer, will make stock market debut today. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets ended mostly lower on Friday, as uncertainty about the outcome of the second round of trade talks between the U.S. and China kept traders on the sidelines. Asian markets are trading mostly in green in early deals on Monday after fears of a trade war between the U.S. and China receded following weekend developments.

Back home, Indian equity benchmarks extended southward journey for fourth straight session to end below their crucial 34,900 (Sensex) and 10,600 (Nifty) levels, as doubts whether the Bharatiya Janata Party (BJP) could prove its majority in the southern state of Karnataka weighed on investors’ sentiment. Markets started the session on a pessimistic note with a private report stating that Reserve Bank of India is likely to keep policy rates unchanged in the forthcoming monetary policy review, but will have a hawkish tone on concerns over inflation and as crude oil prices remain elevated. Traders shrugged off UN’s report that India’s economy is projected to grow 7.6% in fiscal year 2018-19, remaining the fastest growing economy in the world, as robust private consumption and benefits from past reforms help the country’s GDP gain momentum but sustained recovery in private investment remains a crucial challenge. Market participants failed to get any sense of relief with Niti Aayog CEO Amitabh Kant’s statement that crony capitalism in India will come to an end with the new bankruptcy code though it was facing some teething troubles. Markets extended losses in last leg of trade on private report stating that crude oil prices may rise further in the coming months, following which India’s current account deficit will be around 2.4% in 2018- 19. Separately, India’s oil imports from Iran surged to 640,000 barrels per day (bpd) in April, its highest level since October 2016, according to data from shipping and industry sources, as refiners raised purchases ahead of looming US sanctions against Tehran. Meanwhile, in a major political development, the Supreme Court held a hearing in the Karnataka government formation matter, directing that the Bharatiya Janata Party (BJP) leader and the state’s new chief minister, B S Yeddyurappa, must conduct the floor test on Saturday at 4 pm. Finally, the BSE Sensex declined 300.82 points or 0.86% to 34,848.30, while the CNX Nifty was down by 86.30 points or 0.81% to 10,596.40.