Markets likely to make flat-to-positive start

Domestic equity markets ended Wednesday’s session at fresh lifetime highs, as positive cues from global markets and earnings season supported gains. Today, the markets are likely to make flat-to-positive start, amid mixed global cues. Traders may take encouragement with the International Monetary Fund’s (IMF) statement that India is on track to hold its position as one of the world’s fastest-growing economies as reforms start to pay off. The $2.6 trillion economy was described by Ranil Salgado, the IMF’s mission chief for India, as an elephant starting to run, with growth forecast at 7.3% in the fiscal year through March 2019 and 7.5% in the year after that. There will be some support with a report that India’s average per capita income in the last four financial years was higher at Rs 79,882 as compared to the preceding four fiscals. As per the report, the per capita income grew by 4.6% in 2013-14 to Rs 68,572; 6.2% to Rs 72,805 in 2014-15; 6.9% to Rs 77,826 in 2015-16 and by 5.7% to Rs 82,229 in 2016-17. However, there will be some cautiousness with CARE Ratings’ report that economic growth has gone downhill since touching 8.2% in 2016, and correspondingly, the trend in employment growth has dovetailed market sentiment. The growth in the total employee base has dropped by over 1 percentage point to 6.6% in FY18, from 7.7% in the year-ago period. GDP growth has tapered off in the last couple of years, clocking 7.1% and 6.7% growth in FY17 and FY18 respectively. Meanwhile, the installed power generation capacity in India has risen to 344 GigaWatts (GW) and its energy deficit, which stood at over 4% in 2014, has shrunk to less than 1% in 2018. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly lower on Wednesday, as the United States and China continued to spar over trade policy. Asian markets were trading mixed in early trade on Thursday, as China hit back against the Trump administration’s latest tariffs and tensions ratcheted up between the US and Russia.

Back home, Bulls made come back on Dalal Street after a day’s break on Wednesday, with frontline gauges ending at fresh record high levels. Markets started in green but traders remained concerned with ICRA’s latest report that in spite of corporates witnessing a healthy 22% revenue growth in the June quarter, most have seen flat margins, with airline and cement companies seeing declining margins due to rising input costs and crude prices. Key gauges traded almost flat in morning deals, as sentiments remained dampened with Care Ratings’ report that there has been a marginal decline of 1% in employment growth at 6.6%, mainly due to a larger number of companies having witnessed lower or negative hiring growth. It added that the employment growth in 2016-17, was at 7.7%. Adding to the pessimism, the Ministry of Corporate Affairs issued ‘preliminary notices’ to 272 companies for alleged non-compliance with CSR provisions under the companies law. However, markets gained momentum in noon deals and traded firmly afterwards, as traders took encouragement with International Monetary Fund’s (IMF) statement that India is on track to hold its position as one of the world’s fastest-growing economies as reforms start to pay off. Indian economy was described by Ranil Salgado, the IMF’s mission chief for India, as an elephant starting to run, with growth forecast at 7.3% in the fiscal year. However, IMF in its latest report also said that the Reserve Bank of India (RBI) will need to gradually tighten monetary policy further, in order to keep inflation in check. Traders took note of report that the Lok Sabha has approved the first batch of supplementary demands for grants envisaging a gross additional outgo of Rs 11,697.92 crore for the current fiscal. Finally, the BSE Sensex soared 221.76 points or 0.59% to 37,887.56, while the CNX Nifty was up by 60.55 points or 0.53% to 11,450.00.