The Indian markets snapped four-session winning streak on Friday to end the day with marginal losses, amid escalating trade tensions between the US and China as talks between the two countries ended without any significant outcome. Today, the start of the F&O expiry week is likely to be a bit positive following firm global cues. Traders may take note of a report that former Niti Aayog vice-chairman Arvind Panagariya opined that rupee depreciation was long overdue, saying appreciated currency had hurt the country’s exports. He further said India’s macroeconomic management is sound and there was no reason to worry. Besides, the government is looking to complete nearly three-fourths of its disinvestment target by the end of December and has a pipeline of about 15 companies in which it will sell stakes to achieve this interim goal. Meanwhile, the second phase of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) India scheme will be kicked off on September 7, 2018, by Prime Minister Narendra Modi. Under Phase II of the initiative, the government has earmarked a budget of Rs 5500 crore to be used over the next five years and will be used to provide subsidies to all types of electric vehicles. However, there may be some cautiousness with the Reserve Bank of India’s (RBI) data showing that India’s foreign exchange (Forex) reserves slipped by $33.2 million during the week ended August 17. Also, traders will be concerned about a private report that high borrowing costs and weakness in rupee is expected to impact corporates, while uncertainties in the global market has the potential to derail the global growth story. There will be some buzz in the real estate related stocks with ICRA’s report that the adoption of new accounting standard IndAS has dented the net-worth of nine major listed real estate firms by 18% and revenues by 23.6% sequentially in June quarter.
The US markets rose on Friday, supported by remarks by Federal Reserve Chairman Jerome Powell, who said that a gradual process of interest rate increases remains appropriate as the US economy heats up and the labor market tightens. Asian markets were trading in green in early deals on Monday, taking support from Wall Street’s gains on Friday.
Back home, key equity indices ended the lackluster session of trade with marginal losses on Friday, as traders remained cautious ahead of US Federal Reserve Chairman Jerome Powell’s big Jackson Hole speech that could bring a dovish surprise. Markets started the session on positive note but soon turned pessimistic as traders turned concern about a report that the government has imposed standard conditions for as many as 25 sectors like steel, coal and oil, seeking environment clearance (EC) for expansion of existing projects or new projects. Some cautiousness also crept in with a private report that the Goods and Services Tax (GST) collections may come in as a surprise for the government as collections for the month of July are likely to be lower on both year-on year basis and a month-on-month basis. As per the report, collections may range between Rs 89,000 crore and Rs 91,000 crore for July which are to be reported in August. Traders took note of Niti Aayog vice chairman Rajiv Kumar’s statement that India needs three-four large lenders to figure among top 200 global-sized banks. He also noted that India’s banking sector is highly conservative. He made a strong case for giving banking sector more freedom to take risks and provide credit to industry especially the Micro, Small & Medium Enterprises (MSME) sector. However, losses remained capped as traders took some solace after Moody’s Investors Service in its Global Macro Outlook for 2018-19 forecasted that India’s gross domestic product (GDP) growth is likely to be around at 7.5% in 2018 and 2019 as it is largely resilient to external pressures like those from higher oil prices. Some support also came with report that India will explore opportunities to increase exports of petroleum products, cars and motorcycles, and mobile phones to Kenya during the joint trade committee meeting of the two countries. Traders also take note of the Commerce Ministry’s statement that a National Logistics Portal is being developed to ensure ease of trading in the international and domestic markets, as India eyes lowering logistics cost from 14% of GDP to less than 10% by 2022. Finally, the BSE Sensex declined 84.96 points or 0.22% to 38,251.80, while the CNX Nifty was down by 25.65 points or 0.22% to 11,557.10.
