Markets to make negative start on feeble global cues

Indian equity markets hit fresh record highs on Friday, with encouraging first-quarter earnings and positive cues from global markets helping underpin investors’ sentiment. Today, markets are likely to make negative start amid feeble global cues. Traders may remain on sidelines ahead of Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) which is slated to meet during July 30 to August 1 for the third bi-monthly monetary policy statement for 2018-2019. Traders may remain concern on private report that the RBI’s rate-setting panel will go for a status quo on key policy rates at the August monetary policy review. The report acknowledged that the risks on inflation still persist, but added that the rise in food prices (in June and July) has been lower than the historical trend. However, traders may get some support later in the day with Aayog CEO Amitabh Kant’s statement that the country needs to improve its human development index (HDI) to achieve a growth of around 10 per cent. Traders may also get some support with report that foreign investors have put in over Rs 1,800 crore in the Indian equity markets so far in July after pulling out massive funds in the preceding month. The latest inflow comes after such investors had taken out more than Rs 20,000 crore from the stock market during April-June. Stocks of cement, ACs and televisions manufacturer will be in focus after Union Minister Arun Jaitley exuded confidence that GST rates on cement, ACs and televisions will be cut as tax revenues increase, and only luxury and sin goods will attract the highest slab of 28 per cent.

The US markets ended lower on Friday, as traders remained concern on account of mixed batch of earnings news from big-name companies. Investors failed to get any relief with report from the Commerce Department showing a significant acceleration in the pace of U.S. economic growth in the second quarter. Asian markets are trading mostly in red with focus shifting to the Bank of Japan and other central banks that are holding meetings this week.

Back home, bulls went brisk on Dalal Street on second day in the row, with frontline gauges logging new record highs for yet another day, conquering their crucial 11,250 (Nifty) and 37,300 (Sensex) bastions for the first time ever on Friday. After a gap-up opening, 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 with Niti Aayog CEO Amitabh Kant’s statement that the government’s digitization initiative will bring more transparency in the system. Traders remained optimistic with a private report that after almost a year and half of disruptions in Indian economy due to demonetisation and the Goods and Services Tax (GST), the consumer sentiment is up in the month of July on all fronts from jobs, investments, health of the economy to personal finance. Meanwhile, a report stated that the BRICS nations resolved to strengthen multilateral trading system and called upon member countries of the World Trade Organisation to abide by the rules, amid ongoing trade disputes between major economies. Markets extended northward journey to end near intraday highs on private report stating that trading across borders, payment of indirect taxes and insolvency resolution are the three sets of reforms where India is upbeat, ahead of the release of the World Bank’s ease of doing business report later this year. Investors took encouragement 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 got some support with 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. Finally, the BSE Sensex surged 352.21 points or 0.95% to 37,336.85, while the CNX Nifty was up by 111.05 points or 0.99% to 11,278.35.