After registering record highs for two consecutive sessions, the Indian markets lost steam on Wednesday and late hour sell off drag the markets to intraday low level, as investors preferred to book profits. Today, the start of the F&O series expiry session is likely to be in green on positive global cues. Though, the expiry day is very much likely to bring in volatility later in the day. Traders will be getting some encouragement with the Reserve Bank of India’s (RBI) latest annual report showing that it expects India’s economic growth rate to accelerate to 7.4% in the current financial year (FY19) on pick up in industrial activity and good monsoon. Traders may take note of the government’s statement that demonetisation of high-value currency notes in November 2016 achieved the objectives quite substantially even as the RBI reported most of the demonetised currency was back with the banks. The Central Bank said that 99.3% of demonetised currency, or Rs 15.31 lakh crore of the Rs 15.41 lakh crore demonetised, has been returned. However, there may be some cautiousness with a report that foreign investors have pulled out $280 million from the Indian markets so far this year, while domestic institutional investors (DIIs) continue to invest more aggressively and have put in a staggering $10 billion. There will be some reaction in banking sector stocks with the RBI’s report that bad loans for the banking sector are likely to increase in 2018-19 from the current levels of around 11.5%.
The US markets ended higher on Wednesday as investors grew more hopeful about trade talks between the US, Mexico and Canada. Asian markets were trading mostly in green on Thursday as Wall Street hit record highs in the hope that the current North American Free Trade Agreement (NAFTA) negotiations will lead to a further easing of global trade tensions.
Back home, Indian equity benchmarks ended the lackluster day of trade of trade with a cut of around half a percent on account of selling occurred in last leg of trade. Markets made a cautious start and traded in very tight range near neutral lines for most part of the day, as traders remained on sidelines ahead of August F&O expiry on Thursday. Traders also remained cautious with a private report that the Indian economy is in for a rough ride, with rising oil prices set to continue weighing on its already-weakened currency, widen its deficit, and affect its growth outlook. However, markets somehow managed to restrict their losses, as market participants took some support with Care Ratings in its latest report bet on a higher GDP growth April-June quarter as compared to the last year. Meanwhile, the department of industrial policy and promotion (DIPP) has effectively ruled out foreign direct investment (FDI) in inventory-based ecommerce, allaying concerns raised by those opposed to such a move, even as it agreed with the need for a regulator to oversee the sector. But it was selling in final hour of trade which played spoil sports for the Indian markets and dragged frontline gauges below their crucial 11,700 (Nifty) and 38,800 (Sensex) levels. Sentiments turned pessimistic with the credit rating agency, India Ratings’ latest report stating that the widening current account deficit (CAD), which is projected to cross 2.6% of GDP this year, coupled with the rupee plunge, is likely to increase borrowing costs for corporates and bring down the overall volume of fresh forex loans. Sentiments also remain dampened with Credit rating agency Moody's Investors Service report that there are risks of India breaching the 3.3% fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. Anxiety persisted on street after the Reserve Bank of India in its annual report said that bad loans for the banking sector are likely to increase in 2018-19 from the current levels of around 11.5%. Finally, the BSE Sensex declined 173.70 points or 0.45% to 38,722.93, while the CNX Nifty was down by 46.60 points or 0.40% to 11,691.90.
