Markets to start the new series on positive note

Indian equity markets ended at fresh record highs on Thursday, as earnings optimism prevailed and trade tensions eased after the US and the EU agreed to work on lowering trade barriers. Today, the markets are likely to make a green start, ahead of the start of August series along with June corporate earnings of index heavyweight Reliance Industries and ICICI Bank, Bank of Baroda, HCL Technologies, among others. Traders will be getting support with report that foreign direct investment (FDI) from nations widely regarded as tax havens such as Cayman Islands and Hong Kong jumped in 2017-18, even as overall India-bound investments showed a slower rise, year-on-year (Y-o-Y). From the Cayman Islands, inflows rose in a single year from a low $71.03 million to a whopping $1.23 billion. Traders will be getting encouragement with Alice G Wells, Principal Deputy Assistant Secretary of State for South and Central Asia’s statement that the US wants to reduce its trade deficit with India as quickly as possible, asserting that the Trump administration is aggressively pushing New Delhi on the issues of medical devices, pharmaceuticals, dairy products and agriculture. There will be some support with a report that the US and India are working together hand in glove diplomatically and militarily to build dimensions of the critical bilateral relationship ahead of the two-plus-two dialogue.However, there will be some cautiousness with a private report that even though timely rainfall will help contain price growth, inflation is expected to average 4.7% in the current fiscal, up from 3.6% last year, guiding Reserve Bank of India (RBI) to tighten the key interest rate in the coming months.

The US markets ended mostly lower on Thursday, as the worsening Sino-US trade dispute kept investors cautious, despite signs of rapprochement between the US and Europe. Asian markets were trading mixed in early deals on Friday, following subdued cues from Wall Street which saw technology stocks lag.

Back home, boisterous benchmarks once again logged new record highs with frontline indices surpassing their crucial 11,150 (Nifty) and 36,900 (Sensex) bastions on Thursday. The markets, on the July F&O expiry day, remained remarkably steady with Sensex confining itself to a range of around 100 points. Though, huge volatility was witnessed in last leg of trade but frontline gauges managed to log their new all-time closing highs. Overall, sentiments remained up-beat 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. Traders also took some encouragement with Housing and Urban Affairs Minister Hardeep Singh Puri’s statement that India’s economy will breach the $5 trillion mark by 2025. Some also support came in 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. Sudden selloff witnessed in last leg of trade which dragged markets into red terrain ahead of F&O expiry amid report that as many as 59 mega central sector infrastructure projects, worth at least Rs 1,000 crore each, have reported cost overrun of Rs 1.36 lakh crore. But, the selloff proved short-lived and markets soon recovered to clock fresh record highs as traders took some support with a private report stating that India will remain the fastest-growing major economy this year supported by increased government spending ahead of next year's general election. Meanwhile, the Securities and Exchange Board of India (SEBI) said that the mutual fund industry, which is witnessing record growth, needs a good governance system. Finally, the BSE Sensex surged 126.41 points or 0.34% to 36,984.64, while the CNX Nifty was up by 35.30 points or 0.32% to 11167.30.