The Indian markets before going for a holiday had shown a smart bounce back on Tuesday from previous two sessions’ losses, with Sensex and Nifty gaining more than half a percent each on the back of positive macroeconomic data. Today, the markets are likely to make a cautious start amid weak global cues. There will be some cautiousness with report that India’s trade deficit soared to a near five-year high of $18 billion. The commerce ministry data showed that the country’s exports rose by 14.32% to $25.77 billion in July mainly on account of better performance of gems and jewellery sector as well as petroleum products, while imports during July were valued at $43.79 billion, a growth of 28.81% compared to $33.99 billion in the year ago period. Also, there will be negative reaction on India Ratings’ report that if the steep decline in the household savings rate -- which has fallen to 16.3% from 23.6% between fiscals 2012 and 2017 -- continues, it may pose a serious challenge to overall growth and the macroeconomic stability. However, traders may react to some positive statements by the Prime Minister Narendra Modi that structural reforms of four years by his government have transformed the Indian economy from being among world’s fragile five to an elephant that has started to run and made it a destination of multi-trillion dollar investment. There will be some support with FICCI’s latest Economic Outlook Survey stated that the Indian economy is expected to grow at 7.4% in the current fiscal, higher than the previous year. Traders will also be reacting to Union Minister Arun Jaitley’s statement that India has comfortable foreign exchange reserves to deal with any undue volatility in the currency market and developments are being closely monitored.
The US markets fell on Wednesday as investors turned risk-averse on disappointing earnings and escalating global tariff worries. Asian markets were trading mostly in red on Thursday, taking cues from losses on Wall Street after Chinese internet giant Tencent reported a fall in quarterly profit - a disappointing result that weighed on the tech space stateside.
Back home, bulls made come back on Dalal Street after two sessions of disappointments, with frontline gauges recapturing their crucial 37,800 (Sensex) and 10,400 (Nifty) levels. Sentiments remained jubilant since beginning of the trade as traders took encouragement with better-than-expected macro-economic data. The Central Statistics Office’s (CSO) data showed that India’s Retail inflation fell to nine-month low of 4.17% in July on account of slowdown in prices of vegetables and fruits. Its previous low was in October 2017 at 3.58%. Retail inflation, measured by Consumer Price Index (CPI) had hit a five-month high of 5% in June. Traders also took some support with a private report that India’s foreign reserves are in a comfortable range and another 5-8% fall in reserves will not jeopardise the situation. Traders got some relief with a report that micro and small enterprises (MSEs) are getting more and more optimistic about their business prospects. The CriSidEx index, which measures sentiment among MSEs rose to a three-quarter high of 127 in the first quarter of the current financial year, up from 121 in the fourth quarter of the previous financial year. Buying accelerated in later part of the trade after Wholesale price index (WPI) inflation eased to 5.09% in the month of July 2018, supported by fall in the prices of minerals, crude petroleum & natural gas. However, the markets trimmed some of their gains in dying hour of the trade, as the Reserve Bank of India (RBI) in its annual inspection of banks’ books examined 200 stressed accounts dating back to 2011. Some concerns came after the Prime Minister’s Office directs the Finance Ministry to take action against tax evaders under the GST regime. Finally, the BSE Sensex surged 207.10 points or 0.55% to 37,852.00, while the CNX Nifty was up by 79.35 points or 0.70% to 11,435.10.
