Markets likely to make an optimistic start

Indian equity markets ended at a five-month closing high on Monday, as investors put trade worries on the back burner and shifted focus to the upcoming earnings season. Today, the markets are likely to make an optimistic start, following firm global cues.  Traders will be looking for first-quarter corporate earnings for the financial year 2018-2019, with India’s biggest software services exporter Tata Consultancy services (TCS) reporting quarterly results today. Investors will be eyeing the commerce and industry ministry’s data on ease of doing business for states and union territories (UTs). Traders may get some support with rating agency Crisil’s latest report that India Inc will deliver the highest quarterly revenue growth in three years at 12.8% in the April-June period, but high oil prices will narrow profit margins by 0.20%. Meanwhile, NITI Aayog vice-chairman Rajiv Kumar made a case for promoting Zero Budget Natural Farming (ZBNF) in states, saying it would help in doubling farmers’ income by 2022. However, traders will be concerned with a private report that the US-China trade war will impact foreign investment into the country and the Reserve Bank of India (RBI) will have to sell foreign currencies to defend the rupee at the 69 level to a dollar. There will be some buzz in banking sector stocks with a private report that banking sector woes are expected to continue in the first quarter of the financial year with weak profits despite a pickup in retail-backed credit growth and easing of fresh bad loans.

The US markets ended higher on Monday,  as investors set aside concern about escalating trade tensions and rising political tension abroad to focus on the coming earnings season. Asian markets were trading in green in early trade on Tuesday, as recent trade-related concerns seemed to have faded for now.

Back home, Monday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges recapturing their crucial 10,850 (Nifty) and 35,900 (Sensex) levels amid firm global cues. Markets made a gap-up opening and traded with traction in early deals with traders taking encouragement from industry body Assocham’s statement that the government’s decision to hike the minimum support price (MSP) for 14 khariff crops would boost farmers’ income, resulting in a huge rural demand push to the Indian economy. Key indices gained momentum and there appeared not even an iota of profit booking in the session afterwards with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained upbeat with a report by the World Trade Organization (WTO) showing that India has initiated far more number of measures widely considered to be trade restricting since last year, when the US and China began locking horns on a global trade war spanning hundreds of billions of dollars. Some support came in with Chief Executive Office and Managing Director of BSE Ashishkumar Chauhan’s statement that India will hit double-digit growth rates soon with growing GDP, legislative reforms such as GST and IBC, bolstered trading sentiments. Economic Affairs Secretary Subhash Chandra Garg’s statement that India's macroeconomic story is quite good too aided sentiments. He also noted that the risks to the macro story and stability are far more manageable than ever. Adding to the optimism, foreign investors have pumped in over Rs 3,000 crore in the Indian capital markets in the last five trading sessions after pulling out hefty funds during April-June. The recent infusion comes following a net outflow of more than Rs 61,000 crore in the last three months. Prior to that, they had poured in Rs 2,662 crore in March. Meanwhile, Union Finance Minister Piyush Goyal has lauded the Goods and Service Tax council for working as a responsive organisation and successfully implementing GST bill in the country in just a year. Finally, the BSE Sensex surged 276.86 points or 0.78% to 35,934.72, while the CNX Nifty was up by 80.25 points or 0.74% to 10,852.90.