Markets likely to make pessimistic start on weak global cues

Indian equity benchmarks fell notably on Tuesday as weak cues from Asia and Europe prompted traders to book some profits after three days of gains. Today, the markets are likely to make a negative start amid feeble global cues as Italy’s political turmoil roiled global markets. Traders will also remain concern on report that Hardening domestic fuel prices are likely to weigh on the Reserve Bank’s rate setting panel, MPC, at its 3-day meet from June 4. The monetary policy review will take into account the retail inflation which rose to a 4-month high of 3.18 per cent in April mainly on account of increasing prices of petrol and diesel. Traders will get some support later in the day with Ficci’s report that India’s GDP growth is expected at 7.1 per cent for the January-March quarter of the last fiscal and 6.6 per cent for the entire 2017-18. The Central Statistics Office (CSO) is scheduled to release GDP numbers for the fourth quarter as well as the 2017-18 fiscal on May 31. Some solace will also came with exporters body FIEO’s statement that India’s exports are expected to record a growth of about 15-20 per cent and touch $350 billion in the current fiscal on account of a host of factors including rise in commodity prices. There will be buzz in banking stocks after audits undertaken by the Reserve Bank of India revealed that bad loans at the country’s five biggest state-run banks are about Rs 47,000 crore more than what the lenders had assessed.

Following the long holiday weekend, the US markets moved sharply lower during trading on Tuesday. The sell-off on Wall Street came as traders used concerns about political uncertainty in Italy as an excuse to sell stocks. All the Asian markets are trading in red on Wednesday as a sell-off in U.S. and European markets weighed on sentiment during the Asian trading session. The political crisis in Italy took center stage, with investors concerned over its implications for the rest of the euro zone.

Back home, Tuesday turned out to be a dismal day of trade for Indian equity benchmarks where frontline gauges ended the session below their crucial 10,650 (Nifty) and 35,000 (Sensex) levels, as traders opted to book profit after three days of continuous rally. Markets started the session on cautious note but gained traction with traders taking support from Economic Affairs Secretary Subhash Chandra Garg’s statement that the Indian economy is expected to grow between 7.3-7.5 percent in the March quarter. The government will release GDP data on Thursday. He said the country was expected to grow at 6.7 percent in the 2017/18 financial year that ended in March. Adding to the optimism, the India Meteorological Department (IMD) said that the southwest monsoon hit Kerala today, three days before its scheduled arrival. The onset of monsoon over the southern state marks the commencement of the four-month long rainy season in the country. The IMD has made a forecast of normal rainfall this season. Some support also came with External Affairs Minister Sushma Swaraj’s statement that her ministry’s economic diplomacy attracted $209.83 billion for India’s flagship development programmes. She also said that the External Affairs Ministry also created two new divisions for this - Department of Economic Diplomacy and Department of States - and merged both of them. However, selling which emerged in second half of the trade dragged markets below their respective crucial levels. Sentiments weakened with a private report stating that the June policy review meeting is likely to be a close call, while the tone of the policy statement is expected to remain hawkish. The markets participants paid no heed towards report that the Finance Ministry has clarified applicability of the Goods and Services Tax (GST) on farmers. It has said that support services like renting or leasing of land by farmers for agriculture, forestry, fishing or animal husbandry are exempt from the ambit of new indirect tax. Finally, the BSE Sensex declined 216.24 points or 0.61% to 34,949.24, while the CNX Nifty was down by 55.35 points or 0.52% to 10,633.30.