Markets likely to make cautious start amid weak global cues

Indian equity markets, continuing their record-breaching spree, ended higher on Monday, with Sensex and Nifty ending at record closing high, on the back of healthy quarterly earnings. Today, markets are likely to make a cautious start, amid weak global cues. Investors will be eyeing the Reserve Bank of India (RBI) policy meeting to decide on the key interest rate amid elevated oil prices and inflation hovering around 5%. There will be some cautiousness with RBI’s data showing that India Inc raised $2.71 billion through external commercial borrowing (ECB) and rupee-denominated bonds (RDBs) in June 2018, up by 66.3% over the same month last year. As per the data, Indian companies had raised $1.63 billion from overseas sources in June 2017. Traders will also be reacting to a private report that corporate India’s business optimism index for the July-September quarter registered an 11.7% increase over last year, while on a quarter-on-quarter basis it has declined. However, traders may get some support later in the day, with Crisil’s report that India is much better placed than many other emerging market peers or compared to its own situation in 2013 during the taper tantrum, to tackle risks arising out of asymmetry in monetary policy of advanced economies, the rise in crude prices and the escalation of trade war tension. Meanwhile, Commerce Minister Suresh Prabhu has said that the government is taking legislative as well as administrative measures for an integrated strategy to reduce logistics related hurdles for boosting domestic and global trade. There will be buzz in markets, as around 108 companies will declare results for June quarter which includes Ajanta Pharma, Bank of India, Bharat Electronics, Castrol India, Dabur India, Mahanagar Gas, Tata Motors, Vedanta, and V-Guard.

The US markets ended lower on Monday, as investors braced for a busy week of corporate earnings and central-bank meetings. Asian markets were trading in red in early deals on Tuesday, taking cues from the rout in global technology shares, while the yen edged higher ahead of the Bank of Japan's rate review, at which it could flag a shift away from its massive monetary stimulus.

Back home, extending their record-breaking spree for third straight session, Indian equity benchmarks ended the session with a gain of around half a percent with Nifty conquering 11,300 mark, while Sensex ending just shy of 37,500 level. Markets soon after a positive start entered into red terrain as traders turned cautious ahead of the Reserve Bank of India (RBI) policy meet that begins on July 30. Sentiments remained dampened with a private report stating that the RBI’s rate-setting panel will go for a status quo on key policy rates at the August monetary policy review. Sentiments also remained dampened with rating agency Moody’s report stating that the recent Goods and Services Tax (GST) rate cuts on 88 items will weigh on government’s revenue collection and is ‘credit negative’ as it will put pressure on efforts of fiscal consolidation. Investors took note of Niti Aayog CEO Amitabh Kant’s statement that the country needs to improve its human development index (HDI) to achieve a growth of around 10%. However, markets recouped losses and entered into green terrain, as traders took some encouragement 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. Markets extended gains to end near fresh all-time highs, as sentiments remained upbeat with Union Minister of State for Finance Shiv Pratap Shukla’s statement that the government is making concerted efforts to double the farmers' income by 2022. He also said that the government has also taken concrete steps as per the recommendations of the Swaminathan committee reports. Meanwhile, the government removed restrictions for imports of urea for industrial, non-agriculture and technical grade. Finally, the BSE Sensex surged 157.55 points or 0.42% to 37,494.40, while the CNX Nifty was up by 41.20 points or 0.37% to 11,319.55.