Markets to make flat-to-positive start on Monday

Indian equity benchmarks ended lower on Friday after two sessions of strong gains, with a weakening rupee, oil price volatility and muted global cues weighing on markets. Today, the markets are likely to make flat-to-positive start to the new week. Traders will get some support with CII’s statement that Industry is expecting the GDP to grow by close to 8 per cent over the next couple of years, as strong reforms process and fiscal prudence have laid a solid foundation for growth. Some support will also come with report that foreign direct investment (FDI) in India increased to $61.96 billion in 2017-18. FDI inflows stood at $60 billion in the previous fiscal. During the four years of the BJP government, foreign inflows jumped to $222.75 billion from $152 billion in the previous four-year period. Meanwhile, industry body Assocham has said reducing taxes is the best solution to check the spurt in fuel prices which would also tremendously help India on the exports front. However, there will be some concern with report that India’s forex reserves declined by $593.7 million to $412.23 billion for the week ended June 1 on a dip in the gold assets. In the previous reporting week, the total reserves had declined by $2.23 billion to $412.83 billion. There will be buzz in oil and gas related stocks on report that fuel prices on Saturday continued its downward streak with petrol rates falling by 40 paise per litre and diesel rates being cut by 30 paise per litre.

The US markets ended mostly higher on Friday, but their gains was kept in check amid increasing tensions between the U.S. and key trade partners as the G-7 summit kicked off. Asian markets trading cautiously at this point of time, as investors focused on a mix of trade tensions and a landmark meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un.

Back home, recovery in last leg of trade helped, Indian equity benchmarks to end almost flat on Friday with frontline gauges holding their crucial 35,400 (Sensex) and 10,750 (Nifty) levels. Markets started the session on a pessimistic note amid sluggish global trend. The sentiments also affected after rupee fell to its one week low against the dollar in the morning trade. Sentiments remained down-beat after Union Minister Dharmendra Pradhan said that with petrol and diesel kept out of the purview of GST, the state owned oil industry is losing Rs 200 billion annually in terms of input credit. Traders also seems to be cautious with Moody’s Investors Service’s statement that India could prune its capital expenditure to avoid any slippage of its fiscal deficit target of 3.3% of GDP in the current fiscal, but warned any reduction in the excise duty on petroleum products would exert negative pressure on the country’s sovereign credit profile. Some anxiety also persist among investors with government identifying over 2.25 lakh companies and 7,191 LLPs which have not filed requisite financial statement for 2015-16 and 2016-17, and they may be struck off during the current financial year. The selling got intensified and markets even went to test their psychological 35,250 (Sensex) and 10,700 (Nifty), but key gauges got strong support near those levels and managed to prune most some of their losses to end with negligible cut. Domestic sentiments got relief with DIPP Secretary Ramesh Abhishek's statement that foreign direct investment in India increased to $61.96 billion in 2017-18. He also said during the four years of the Modi government, foreign inflows jumped to $222.75 billion from $152 billion in the previous four-year period. Market participants get some comfort with industry body Assocham’s statement that reducing taxes is the best solution to check the spurt in fuel prices which would also tremendously help India on the exports front. Meanwhile, the International Monetary Fund (IMF) has said addressing the ongoing crisis in the banking sector was important for India to support investment and inclusive growth agenda. Finally, the BSE Sensex slipped 19.41 points or 0.05% to 35,443.67, while the CNX Nifty was down by 0.70 points or 0.01% to 10,767.65.