Markets likely to make a green start on positive global cues

Buying intensified in the last hour of trade helped Indian equity markets to end Tuesday’s session on positive note. Gains in oil marketing company stocks also helped the markets, as oil prices declined as crude export terminals in Libya have reopened and exports from other OPEC countries and Russia have improved. Today, the start is likely to be in green, following positive global cues. Traders will be getting encouragement with the Confederation of Indian Industry (CII) president Rakesh Bharti Mittal’s statement that GDP growth at 7.5% plus was a very healthy and positive sign for Indian economy, noting that impact of sustained structural reforms is now being felt on the ground. There will be some support with a private report that inflation based on wholesale prices, which touched a 4-year high in June, seems to have peaked for this financial year, and is expected to glide down to around 4.1% by March 2019. Meanwhile, India’s import bill of crude oil and petroleum products swelled 57% to $12.73 billion in June as compared to the same month last year. There will be some buzz in the PSU banking stocks with report that the finance ministry is likely to infuse about Rs 10,000 crore within a few days in some state-owned lenders including PNB, Corporation Bank and Central Bank of India, to help them meet regulatory capital requirement. There will be buzz in Textile sector stocks with report that the government doubled import duty on over 50 textile products -- like jackets, suits and carpets -- to 20%, a move that is aimed at promoting domestic manufacturing.

The US markets ended higher on Tuesday, as investors took Federal Reserve chairman Jerome Powell’s comments to suggest that the central bank is willing to slow down the pace of interest-rate increases if needed. Investors also continued dissecting the latest round of corporate earnings results. Asian markets were trading in green in early deals on Wednesday, after an upbeat assessment on the US economy from Federal Reserve Chairman Jerome Powell comforted investors wary of a blowout in protectionism.

Back home, Indian equity benchmarks ended the Tuesday’s trade in green terrain, with frontline gauges recapturing their crucial 11,000 (Nifty) and 36,500 (Sensex) levels. Despite cautious start, markets gained momentum and traded in positive trajectory for most part of the day’s trade, as sentiments remained up-beat with report that India Inc said the spike in inflation, which rose to over 4-year high of 5.77% in June, was temporary as it is caused by disruptions in supply chain, and inflation is expected to be benign on the back of a good monsoon in the near future. Some support also came with report stating that corporate India announced deals worth $74.8 billion in the January-June period, registering a 90% jump over last year, largely driven by big ticket consolidations. Traders also took note of a report that the Indian government on July 16 invited Omani companies to invest in India and benefit from Make in India programme aimed to encourage manufacturing. Markets changed gear in last leg of trade to end near intraday highs as traders took encouragement with some better-than-expected Q1FY19 numbers posted by bluechip companies. Some optimism also spread among the local traders with private report projecting the Indian economy to record 7.4% growth in 2018-19. Traders shrugged off report stating that the International Monetary Fund (IMF) trimmed India’s growth projection by 0.1 percentage point to 7.3% for 2018-19 against the earlier estimate of 7.4%, owing to high oil prices and a tight monetary policy regime. IMF said that India’s growth rate is expected to rise to 7.3% in 2018 (2018-19) and 7.5% in 2019 (2019-20), the projection is 0.1 and 0.3 percentage point lower for 2018 and 2019, respectively. Traders also paid no heed towards IHS Markit Business Outlook survey stating that the Indian business sentiment regarding future activity remained subdued in June amid intense competition, high fuel prices and strong cost pressures. Meanwhile, Niti Aayog CEO Amitabh Kant said that For India to grow at 9-10% for three decades consistently and reap the dividend of demographic advantage, promoting entrepreneurship among women has to be the key strategy. Finally, the BSE Sensex surged 196.19 points or 0.54% to 36,519.96, while the CNX Nifty was up by 71.20 points or 0.65% to 11,008.05.