Markets to make mildly positive start

Snapping two-day losing streak, Indian equity markets ended with notable gains on Wednesday, following other Asian counterparts after reports suggested that Beijing may announce some policy stimulus to mitigate the impact of China-US trade war. Today, the start is likely to be mildly positive, as traders looked ahead to the Bank of England and OPEC meetings for direction. Markets may get some support with a private report that the credit growth in the micro, small and medium enterprises (MSME) sector is improving with the overall exposure reaching the highest level in over a year and impacts of demonetisation and the GST also seem to be subsiding. As per the report the overall credit exposure has shown the highest growth in last five quarters at Rs 54.20 trillion as of March 31, 2018, with MSMEs segment constituting Rs 12.6 trillion (23%) of the commercial credit outstanding. Meanwhile, the government has cleared pending GST refunds to the tune of Rs 38,062 crore to the exporters so far. However, traders will remain concern with former NASSCOM president R Chandrashekhar sounding a note of caution on the economy, saying it could bedisrupted if job growth was not constant. He said government statistics showed that nearly four million jobs in the formalsector were created from September 2017 to March 2018, of which about 50% were in the service sector. Besides, investors also will be eyeing the markets regulator SEBI’s meeting where it will discuss proposed overhaul of governance norms for market infrastructure institutions as well as amendments to buyback and takeover norms. Other proposals, including reducing the cooling off period for former employees to one year and review of the watchdog's recruitment policy, are also on the agenda.

The US markets ended mostly higher on Wednesday, as traders shrugged off concerns about a trade war been the US and China. Asian markets were trading mostly in green on Thursday, on bargain-buying after the previous day’s battering. Besides, the absence of fresh developments in the US-China trade war also boosted investor sentiment.

Back home, Indian equity benchmarks ended the Wednesday’s trade in green terrain with frontline gauges recapturing their crucial 35,500 (Sensex) and 10,750 (Nifty) levels. The markets started the session on firm note, aided by Economic Affairs Secretary Subhash Chandra Garg’s statement that it is a plausible aspiration for India and the country has also potential to become a $10 trillion economy by 2030. He added that this target is likely to be achieved with the help of a sustained average growth of 8% coupled with an assumed devaluation of Indian rupee vis-a-vis US dollar at Re one per year. Domestic sentiments also got boost with a private report stating that advancing gender parity could contribute $770 billion to India’s GDP by 2025. The market participants also took note of Moody’s latest report that non-financial corporates in the country may show modest improvement in their leverage levels in the current financial year, supported by higher revenue and earnings growth. In the second half, the bourses continued their northward rally to end near their fresh intraday high points, after Prime Minister Narendra Modi said his government has doubled the Budget for agriculture to Rs 2.12 trillion (Rs 2.12 lakh crore) to achieve its objective of doubling farm income by 2022. Adding some comfort, Niti Aayog CEO Amitabh Kant said that the Centre has saved Rs 90,000 crore by digitally transferring money to beneficiaries of 440 government schemes. Some support also came with another private report that despite adverse impact on GST implementation, India saw a 20% increase in both the number of dollar millionaires and their wealth in 2017 to emerge as the fastest growing market for high net population. Investors paid no heed towards report that a 200-basis-point increase in interest rates could cause a sharp rise in emerging-market corporate debt at risk of default, with Brazilian and Indian companies most vulnerable. Finally, the BSE Sensex jumped 260.59 points or 0.74% to 35,547.33, while the CNX Nifty was up by 61.60 points or 0.58% to 10,772.05.