Markets to make positive start of F&O expiry session

Indian equity markets ended flat on Wednesday, amid mixed global cues as investors awaited the outcome of a key meeting between US President Donald Trump and European Commission President. Today, the markets are likely to make optimistic start of the F&O expiry session, tracking positive global cues. Traders will be getting encouragement with Commerce and Industry Minister Suresh Prabhu’s statement that India’s exports would register healthy growth rates in the coming months and are expected to touch $350 billion in 2018-19. He also said that services sector is set to become a dominant driver of the Indian economy and will contribute $3 trillion to the GDP by 2025. There will be some support with Housing and Urban Affairs Minister Hardeep Singh Puri’s statement that India’s economy will breach the $5 trillion mark by 2025. Traders will be getting some support with the global rating agency Moody’s Investor Service’s statement that the fund infusion in five weak public sector banks will be credit positive and strengthen their capitalization. Traders will also be reacting to outgoing Chief Economic Adviser Arvind Subramanian exuded confidence that the highest slab of 28% tax under the Goods and Services Tax (GST) would be virtually a hollow shell over the next year or so. The CEA also said that a lot of effort and time was devoted to the simplifying the burden on small and medium enterprises.  Meanwhile, notwithstanding the demand from the airlines, the government has said there was no proposal to bring Aviation Turbine Fuel (ATF) under GST. Besides, the Securities and Exchange Board of India (SEBI) said that the mutual fund industry, which is witnessing record growth, needs a good governance system. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended higher on Wednesday, after President Trump secured some concessions from the European Union to avoid an escalation in trade tensions. Asian markets were reading mostly in green on Thursday, taking leads from gains on Wall Street after US President Donald Trump and European Commission President Jean-Claude Juncker agreed to work toward eliminating trade barriers on industrial goods.

Back home, Indian equity benchmarks ended the choppy day of trade almost flat, as traders remained on sidelines ahead of November derivatives expiry on Thursday. Markets traded lackluster throughout the session 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). Investors remained concerned with Minister of State for Agriculture Parshottam Rupala’s statement that Union Government, at present, is not considering any loan waiver Scheme for farmers, as such, waivers may impact the credit culture of a State by incentivising the defaulters, even if they are in a position to repay the loan, and thus, create/amplify the moral hazard by discouraging those borrowers who have been regular in repaying their loans. Anxiety also persisted with a private report stating that India’s low trade-to-gross domestic product (GDP) ratio, favourable demographics, high commodity imports and pro-reform government will shield it to a large extent should trade tensions escalate and lead to a global economic slowdown. Though, traders took some solace 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. Market participants also took some support 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. Local gauges also get some support with a private poll stating that India will remain the fastest-growing major economy this year supported by increased government spending ahead of next year’s general election, but rising oil prices pose the biggest downside risk. Finally, the BSE Sensex rose 33.13 points or 0.09% to 36,858.23, while the CNX Nifty was down by 2.30 points or 0.2% to 11,132.00.