Markets to make a cautious start

Indian equity markets ended higher on Tuesday, as investors shifted their focus to upcoming corporate earnings and put global trade concerns aside. Today, the markets are likely to make cautious start, following mixed global cues. Traders will remain concern about a private report that Indian inflation likely rose to a near two-year high in June, driven by surging oil and food prices, a development that would strengthen calls for more monetary policy tightening by the Reserve Bank of India. There will be some cautiousness with India’s G-20 Sherpa Shaktikanta Das, expressing concern over increasing protectionism and trade conflicts across the world, said that countries ought to work out arrangements that are beneficial to all in the larger interest of reviving global growth. However, traders may get some support later in the day with report that India and South Korea signed 11 agreements to expand business ties and more than double mutual trade to $50 billion by 2030. Meanwhile, India has imposed anti-dumping duty of up to $528 per tonne for 5 years on a Chinese polyester yarn used in automobile and other industries. Besides, the Global Innovation Index (GII) has ranked India as the 57th most innovative nation in the world. The country has improved its ranking from 60th position last year. India has been improving steadily since it was ranked 81st in 2015. There will be some reaction in IT sector stocks, after Tata Consultancy Services (TCS), India’s biggest software services exporter, posted a better-than-expected 23% jump in first-quarter net profit to Rs 7,340 crore, buoyed by robust growth at the banking, financial services and insurance (BFSI) and digital verticals. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended higher for fourth straight session on Tuesday as Wall Street shifted from consternation over global trade disputes to enthusiasm over coming second-quarter earnings results following a string of strong economic data that has refreshed investor optimism. Asian markets were trading in red on Wednesday, following the release of a list of an additional $200 billion in Chinese goods on which the US is considering imposing tariffs.

Back home, extending jubilation for third straight day, Indian equity benchmarks ended the Tuesday’s trade with a gains of over around a percent, recapturing their crucial 36,200 (Sensex) and 10,900 (Nifty) levels, amid firm global cues. After a positive start, there appeared not even an iota of profit booking in the session with benchmarks fervently gaining from strength to strength to end near intraday highs, as investors continued hunt for fundamentally strong stocks. Sentiments remained up-beat throughout the session with rating agency Crisil’s latest report stating 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%. Traders also took some encouragement with NITI Aayog vice-chairman Rajiv Kumar making a case for promoting Zero Budget Natural Farming (ZBNF) in states, saying it would help in doubling farmers’ income by 2022. Some support also came with the Reserve Bank of India (RBI) in its latest report revealing that private corporate business sector records robust sales growth in fourth quarter of 2017-18, with the companies posting sales of Rs 9.25 trillion as compared Rs 8.41 trillion in the last quarter of 2016-17. A performance analysis report is based on the abridged financial results of 2,723 listed non-government non-financial (NGNF) companies for the Q4 FY18. Markets extended gains in last leg of trade with a private report stating that India and South Korea will reduce duties on 11 tariff lines in a bid to expand bilateral trade by updating their existing free-trade agreement, called the comprehensive economic partnership agreement (CEPA). Investors also took support from BSE Managing Director and CEO Ashishkumar Chauhan’s statement that there was no need to ‘panic’ over risk management firm Kroll’s observations about Indian economy as the country was a thought leader in corporate governance worldwide. The street paid no heed towards a private report stating that Indian inflation likely rose to a near two-year high in June, driven by surging oil and food prices, a development that would strengthen calls for more monetary policy tightening by the RBI. Finally, the BSE Sensex surged 304.90 points or 0.85% to 36,239.62, while the CNX Nifty was up by 94.35 points or 0.87% to 10,947.25.