Markets likely to make pessimistic start ahead of macro-economic data

Indian equity benchmarks ended with marginal gains as investors turned cautious ahead of some crucial economic data. Today, the markets are likely to make pessimistic start as investors await crucial economic data on consumer inflation and industrial output for direction. India’s retail inflation likely to jump further in May to a four-month high, primarily driven by a surge in energy prices. Traders may remain concern after President Donald Trump has taken a swipe at India along with the world’s other top economies and accused New Delhi of charging 100 percent tariff on some of the US’ goods, as he threatened to cut trade ties with countries who are robbing America. Traders may also remain anxious on report that 1,300 fresh foreign portfolio investors (FPIs) were registered with Securities and Exchange Board of India (Sebi) in 2017-18 as compared to 3,500 new FPIs were registered in the preceding financial year.  However, traders may get some solace later in the day with report that the Reserve Bank came out with draft guidelines on loan system for delivery of bank credit to improve discipline among larger borrowers enjoying working capital facility from the banking system. Meanwhile, the recent amendments in the bankruptcy resolution framework will help reduce timelines, enhance transparency and improve realisations. There will be buzz in steel and power companies with Union minister Piyush Goyal’s statement that the government was looking at opening auctions of coal mines to the steel and power sectors, and that a robust framework was being worked out for commercial mining.

The US markets ended mostly higher on Monday, as traders looked ahead to the historic summit between President Donald Trump and North Korean leader Kim Jong Un on Tuesday. Asian markets trading lower in early deals as investors awaited monetary policy announcements by three major central banks and the most crucial House of Commons votes on Brexit.

Back home, Monday turned out to be a disappointing day of trade for Indian equity benchmarks, as frontline gauges failed to hold initial jubilation and ended with marginal gains as traders booked most of their early gains ahead of the outcome of a historic meeting between the US President Donald Trump and the North Korean leader Kim Jong Un. Markets gained strength after making flat-to-positive start, as traders took some encouragement with CII’s statement that Industry is expecting the GDP to grow by close to 8% over the next couple of years, as strong reforms process and fiscal prudence have laid a solid foundation for growth. Markets extended northward journey in noon deals as some support came 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. Adding to the optimism, Commerce Minister Suresh Prabhu said that India’s GDP growth is likely to cross 8% in the next two years and the government is taking a number of steps including formulation of a new industrial policy to double the economy’s size to $5 trillion in 7-8 years. Further, investors also took some support with a report highlighting that Central Board of Indirect Taxes and Customs (CBIC) cleared over Rs 7000 crore worth Goods and Services Tax (GST) refunds of exporters during the initial phase of the special refund drive undertaken by the authorities. However, market participants pared most of their initial gains as sentiments turned pessimistic, as anxiety spread on the street with Former finance minister P Chidambaram’s statement that state of the economy was bad in the country due to the wrong policies of the NDA government and tyres of three (Exports, Private Investment, Private Consumption) of the four wheels on which the economy rides were punctured. Sentiments also weighed down on report that annual consumer price inflation (CPI) likely to increase at 4.83% in May, the highest since January and above April’s 4.58%. Finally, the BSE Sensex gained 39.80 points or 0.11% to 35,483.47, while the CNX Nifty was up by 19.30 points or 0.18% to 10,786.95.