Markets to start the new series on positive note

Indian equity markets ended lower on Thursday, as escalating trade war concerns coupled with fresh worries over the impact of high oil prices on inflation, current account deficit, fiscal deficit and capital inflows dented investors’ appetite for risk. Today, the start of the new series is likely to be in the green amid mixed global cues. Traders may get some encouragement with the International Monetary Fund (IMF) suggesting steps to sustain the high growth rate which India has achieved. It said that the country should carry out banking sector reforms; continue with fiscal consolidation, simplify and streamline GST; and renew impetus on reforms. Traders may take note of Moody’s Investors Service report that India is among the 5 countries which are least vulnerable to currency pressures amid strengthening of the US dollar, because of low dependence on external capital inflows. However, there may be some cautiousness with a report that money parked by Indians in Swiss banks rose over 50% to CHF 1.01 billion (Rs 7,000 crore) in 2017, reversing a three-year downward trend amid India's clampdown on suspected black money stashed there. Meanwhile, Finance Secretary Hasmukh Adhia has said that the new GST return forms would be introduced from January 1 after successful beta-testing of the software.

The US markets ended higher on Thursday, as strength emerged on Wall Street on the back of bargain hunting, while investors shrugged off lingering concerns about the global economic impact of the ongoing trade dispute between the US and other major economies. Asian markets were trading mostly in green on Friday, as investors took note that China released details of a long-anticipated easing on foreign investment curbs on sectors including banking, automobiles, heavy industry and agriculture, as it moved to open its domestic markets.

Back home, magnifying previous day’s losses, the local equity indices ended Thursday’s session on disappointing note, in line with weak global markets on deteriorating trade relations between the US and China along with weakness in rupee. After a cautious start, the markets remained under pressure, as anxiety spread among investors with outgoing chief economic adviser Arvind Subramanian’s statement that apart from high oil prices, the biggest headwind for India’s growth prospects was stigmatised capitalism, or the view that the private sector could not be trusted. Traders also remained cautious with a report stating that the Goods and Services Tax (GST) investigation wing has detected tax evasion of over Rs 2,000 crore in two months, and data analysis reveals that only 1% of over 1.11 crore registered businesses pay 80% of the taxes. Further, in the last hours of the trade, selling got intensified on the counters, ahead of June F&O expiry due today. Domestic sentiments also got hit with a report stating that the US has issued a strict warning and threatened all countries including India and China to stop oil imports from Iran or face sanctions. However, the markets participants paid no heed towards the Indian Meteorological Department’s latest report that monsoon will cover the entire country in the next 2-3 days. Investors also failed to take any sense of relief from interim Finance Minister Piyush Goyal’s statement that cabinet has approved establishment of two strategic petroleum reserves (SPRs) with a total capacity of 6.5 mln tonnes. India has built three SPR of 5.33 million tonnes in southern India equivalent to meet 10 days of crude requirement. Finally, the BSE Sensex slipped 179.47 points or 0.51% to 35,037.64, while the CNX Nifty was down by 82.30 points or 0.77% to 10,589.10.