Markets to make cautious start as investors look to RBI

Indian equity benchmarks ended lower on Monday, as investors awaited cues from the Reserve Bank of India’s three-day monetary policy meeting beginning on June 4th. Today, the markets are likely to make cautious start as investors will be eyeing Reserve Bank of India’s (RBI’s) second bi-monthly monetary policy outcome for 2018-19, due on June 6th. Traders will also be eyeing services sector data for May slated to be released later in the day. However, traders may get some support with report that as many as 16 projects, including setting up of a cold chain in Madhya Pradesh, were approved under by a commerce ministry scheme to develop infrastructure for promoting exports. Meanwhile, markets regulator SEBI has drastically slashed the additional expense charged by mutual funds to just 5 basis points to help increase the penetration of such products among investors. The move will help reduce the cost of investing in MFs and industry players believe that it may result in lower commissions for distributors. There will be buzz in sugar related stocks on report that Centre is expected to announce a fresh package of almost Rs 8000 crore to bail out the sugar sector. This will be in addition to the financial assistance of Rs 5.50 per quintal of sugarcane announced a few weeks ago, costing over Rs 1500 crore.

The US markets ended higher on Monday as traders continued to react positively to the release of better than expected employment data last Friday. Asian markets are trading mostly in red in early deals, as trade concerns continued to linger ahead of the G-7 meeting later in the week.

Back home, Indian equity benchmarks ended the choppy day of trade with half a percent cut, as traders remained on sidelines ahead of services sector data for May slated to be released on June 5, while the Reserve Bank’s rate decision will be announced on June 6. The RBI is expected to take a wait-and-watch approach despite the higher GDP growth figures released last week. However, Markets started the session with a gap-up opening as traders took some encouragement with Prime Minister Narendra Modi’s statement that India’s economy will sustain a growth of 7.5 to 8% per year. He said the Indian government has kept its economic growth forecast for the current fiscal unchanged at 7.5%, buoyed by turnaround in manufacturing and pick up in investment. Traders also took note of Union Minister Nitin Gadkari’s statement that in a major policy initiative aimed at benefitting farmers, the government has done away with the licensing permits for foreign vessels for coastal movement of agriculture, fishery and animal produce, besides allowing Indian citizens to charter ships for these. But, market participants pared all of their initial gains and markets turned flat and traded choppy for most part of the day, as sentiments remain dampened on report that foreign investors pulled out a massive Rs 29,714 crore from the capital markets in May, making it the biggest outflow in 18 months, primarily due to a surge in global crude prices. Markets extended losses to end near intraday low levels, as some anxiety persist with report that collections from the Goods and Services Tax in May fell to Rs 94,016 crore, from the Rs 1.03 lakh crore collected in April. Traders paid no heed towards report that the country’s Fiscal Deficit, the difference between total revenue and expenditure, has improved in the first month of the current financial year 2018-19, on the back of higher revenue and lower expenditure. As per the latest data released by the controller-general of accounts (CGA), April’s fiscal deficit was at 24.3% of the budget estimates, as against 37.6% for the same period of the last fiscal year. Finally, the BSE Sensex declined 215.37 points or 0.61% to 35011.89, while the CNX Nifty was down by 67.70 points or 0.63% to 10,628.50.