Markets likely to make negative start

Indian equity benchmarks ended Thursday’s session in red territory, as fears of a global trade war persisted and the Reserve Bank of India’s June meeting minutes gave no indication of rate action going forward. Today, the start is likely to be in red, following weak global cues. Traders will be eyeing the Organization of the Petroleum Exporting Countries (OPEC) meet to be held later today to decide output policy. However, markets may get some support later in the day with Export Promotion Council for EoUs and SEZs (EPCES) data showing that exports from special economic zones (SEZs) grew by 38% in May to Rs 29,236 crore. It added that the major sectors contributing to the growth include biotech, chemicals, pharmaceuticals, computers, electronics, non-conventional energy, plastic, rubber, trading and services. Meanwhile, the Securities and Exchange Board of India (SEBI) has made major changes in rules governing fund-raising, to provide flexibility to issuers and to boost capital formation. The regulator tweaked norms governing stock exchanges, clearing corporations and depositories - known as market infrastructure institutions (MIIs) - capping the tenure of top officials and bringing in more accountability to the board structure. There will be some buzz in the banking stocks, with Financial Services Secretary Rajiv Kumar’s statement that 180 day NPA norm for MSMEs will help reverse Rs 15,000 crore in the banking system as they have become standard asset. There will be some buzz in the Oil & Gas sector stocks, on report that India’s crude oil production dropped 3% to just over 3 million tonnes in May on the back of dip in output from fields operated by state-owned Oil and Natural Gas Corp (ONGC).

The US markets ended mostly lower on Thursday, on lingering concerns about the trade dispute between the US and China along with uncertainty about the outcome of this week’s OPEC meeting. Asian markets were trading mostly in red on Friday, amid concern global trade restrictions will curb growth.

Back home, Indian equity benchmarks ended the choppy day with a cut of one third of a percent and frontline gauges settled below their crucial 10,750 (Nifty) and 35,500 (Sensex) levels, as traders looked ahead to the Bank of England and OPEC meetings for direction. Markets soon after positive start pared all of their gains to trade flat for most part of the day as traders remained on sidelines ahead outcome of 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. Traders remained little concerned 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 formal sector were created from September 2017 to March 2018, of which about 50% were in the service sector. Investors took note of report stating that FII flows have seen a bumpy ride so far this year, with a meagre investment of $15 million, while domestic institutional investors (DIIs) continue to invest more aggressively into the Indian equity market and have bought net assets worth $7.9 billion. Losses remained capped with a private report stating 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, India has hiked customs duty on several goods, including Bengal gram, lentils and artemia, imported from the US. The import duty hike would be effective from August 4. Finally, the BSE Sensex declined 114.94 points or 0.32% to 35,432.39, while the CNX Nifty was down by 30.95 points or 0.29% to 10,741.10.