Markets likely to make optimistic start

Indian equity markets ended Tuesday’s session on optimistic note, with both Sensex and Nifty closing at fresh record high, on the back of continued capital inflows and positive cues from global markets. Today, the markets are likely to make optimistic start, with Prime Minister Narendra Modi’s statement that India is emerging as a global manufacturing and start-up hub and many of the Made-in-India products, including cars and smartphones, are today exported to nations from whom the country used to import. Traders will be getting some encouragement with Chairman of the PHD Chamber of Commerce and Industry, Anil Khaitan’s statement that India needs to focus on exports and regulatory reform to propel the Indian economy forward. However, there will be some cautiousness with report that the International Monetary Fund (IMF) has cautioned India it should not rely on global financial markets to finance its current account deficit (CAD) when it goes above 3% of gross domestic product (GDP). The Fund basically advised India to rely more on stable sources of foreign inflow - foreign direct investment (FDI). Meanwhile, a private report stated that the Reserve Bank of India (RBI) will go for status quo in key policy rates in its August policy review. Besides, under fire for reports of a spurt in black money held by Indians in Swiss banks, Finance Minister Piyush Goyal said such money decreased by around 35% in 2017 year-on-year, and by 80% since the Narendra Modi government took over in 2014. There will be some buzz in PSU banking stocks, with the minister of state for finance Shiv Pratap Shukla’s statement, citing data from the Reserve Bank of India, that the gross bad loans of public sector banks (PSBs) hit 15% of advances in 2017-18, while the gross non-performing assets (NPA) ratio for PSBs stood at 14.6% in 2017-18. There will be some important result announcements to keep the markets in action.

The US markets ended mostly higher on Tuesday, as investors welcomed strong corporate earnings reports. Asian markets were trading mostly in green in early deals on Wednesday, following gains on Wall Street and hopes that China will boost fiscal support for its economy, while long-term US yields hovered near six-week highs on speculation the Bank of Japan could be less accommodative.

Back home, extending northward journey for third straight session, Indian equity benchmarks ended Tuesday’s trade at record closing high levels, with frontline gauges surpassing their crucial 36,800 and 11,100 marks. Markets made an optimistic start as sentiments remained upbeat with report that the overall exports from India to BRICS saw an upswing of 7.5% in Q1 2018 Y-o-Y in terms of total volumes, while the country’s imports from BRICS nations is reduced by 3.5%. Traders also took some encouragement with report that the commerce ministry is working on an export promotion strategy to boost shipments of chemicals, plastics and allied products sector to push the growth of the country's overall exports. For the formulation of the strategy, the ministry has constituted a sub-group to deliberate upon the issues of the sector. Adding to the optimism Union Finance Minister Piyush Goyal, a couple of days after goods and services tax (GST) rates were cut on 100 items, said rising tax collections will further help reduce the tariffs. He said, the Directorate General of Anti-Profiteering has been directed to keep a tab on manufacturers of sanitary napkins, so that benefits of the GST rate cut are passed on to consumers. However, markets pared all of their early gains as sudden selloff witnessed in noon deals with traders turning cautious on Securities and Exchange Board of India’s (SEBI) data showing that investments through participatory notes into Indian capital markets plunged to over nine-year low of Rs 83,688 crore at June-end amid stringent norms put in place by the SEBI to check the misuse of these instruments. But, recovery in last leg of trade helped markets to end at record closing high levels, as traders took some support after the US Congress asked the Trump Administration to come up with a strategy that can reflect a measurable progress in its defence ties with India. Finally, the BSE Sensex surged 106.50 points or 0.29% to 36,825.10, while the CNX Nifty was up by 49.55 points or 0.45% to 11,134.30.