Markets to make positive start to F&O series expiry session

Indian equity benchmarks edged marginally lower on Wednesday as worries about political uncertainty in Italy and Spain as well as fresh fears of a trade war between the U.S. and China sapped investors’ appetite for risk. Today, the markets are likely to make optimistic start to the F&O series expiry session, tracking positive global cues. Traders will get some encouragement with report that India likely to retain the position of world’s fastest growing major economy in the January-March quarter, surpassing China’s growth of 6.8 per cent, driven by gains in manufacturing and consumer spending. The poll on the latest quarter’s annual growth was 7.3 per cent, the best pace since July-September 2016, the quarter before the government unexpectedly scrapped high-value currency notes. Some support will also come with commerce and industry minister Suresh Prabhu’s statement that India will pitch for continuing the eligibility of its 3,500-odd goods for low or zero duties in the US. Reports that exports from the country’s special economic zones (SEZs) grew 5.44 percent in April to Rs 20,548 crore as against Rs 19,488 crore in the same month a year ago, too could add to the optimism. According to Export Promotion Council for EOUs & SEZs (EPCES), highest growth in outward shipments was recorded from the Cochin SEZ which witnessed a 704 percent jump from Rs 461 crore in April last year to Rs 3,708 crore this year. However, there will be concern with credit rating agency Moody’s cutting its forecast for India's GDP growth in 2018 to 7.3 percent from 7.5 percent earlier.

The US markets rose sharply on Wednesday, rebounding from the previous day’s rout, as energy shares bounced back amid a rally for oil prices and worries over Italy’s political crisis faded. Asian stocks rebounded from a two-month low and are trading mostly in green in early deals on Thursday, as political turmoil in Italy that had roiled global financial markets showed signs of easing.

Back home, Indian equity benchmarks ended the volatile day of trade with marginal losses on Wednesday amid feeble global cues as Italy’s political turmoil roiled global markets. Markets started the session on pessimistic note as sentiments remained down-beat 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 4.58% in April mainly on account of increasing prices of petrol and diesel. Investors failed to take any sense of relief with CRISIL’s report stating that direct tax collection has surged dramatically post 2016 due to the Income Declaration Scheme and demonetisation. The income tax growth increased from 8.2% in FY16 to 26.8% in FY17 and 21.0% in FY18. The corporate tax growth in the corresponding years were 5.7%, 7.0% and 16.3% respectively. This indicates a significant jump in the number of new income tax filers. However, markets pared all of their losses to enter into green terrain in noon deals as some support came with FICCI’s report that India’s GDP growth is expected at 7.1% for the January-March quarter of the last fiscal and 6.6% 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. Market participants also got some solace with exporters body FIEO’s statement that India’s exports are expected to record a growth of about 15-20% and touch $350 billion in the current fiscal on account of a host of factors including rise in commodity prices. But, the recovery proved short-lived as markets once again slipped into red terrain to end marginally lower after Moody’s Investors Service has cut India's GDP growth forecast to 7.3% in 2018, from previous forecast of 7.5% due to higher oil prices and tighter financial conditions. It, however, kept growth expectation for 2019 unchanged at 7.5%. The region-wise forecast comes with a model error of plus and minus 8%. Finally, the BSE Sensex declined 43.13 points or 0.12% to 34,906.11, while the CNX Nifty was down by 18.95 points or 0.18% to 10,614.35.