The Indian markets fell for the second consecutive session on Thursday as investors fretted over plunging rupee and rising crude oil prices, while August futures and options (F&O) expiry further added to market volatility. Today, the start of the new F&O series is likely to be flat-to-negative amid weak global cues. Investors will be eyeing the first quarter Gross Domestic Product (GDP) numbers to be announced later in the day. There will be some cautiousness with Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta’s statement that exporters are facing uncertainty due to a continuous depreciation of the domestic currency as they are not able to negotiate properly prices of goods in the global markets. However, traders may get some encouragement later in the trade with Finance Minister Arun Jaitley’s statement that India is likely to surpass the UK to become the world’s fifth largest economy next year on growing consumption and strong economic activity. Also, there will be some support with a private report that the economic growth is expected to rise to 7.6% in the April-June quarter of 2018-19 from a sub-6% figure in the year-ago period mainly due to a low-base effect. There will be some buzz in the cement sector stocks with ICRA’s report that despite pick-up in cement demand in Q1 FY19, higher coal, pet coke prices and freight costs in the near-term are likely to put pressure on the profitability margins and debt metrics of the cement companies.
The US markets declined on Thursday on new concerns that the US-Chinese trade dispute will intensify. Asian markets were trading in red on Friday as President Donald Trump’s plans to impose new tariffs on China and renewed turmoil in emerging markets weighed on investor sentiment.
Back home, Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday with key gauges ending the session with marginal cut. After making a cautious start, markets traded in a very tight band tad below their neutral lines throughout the session, as traders remain concerned 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. The sentiments weighed down with Credit rating agency Moody’s Investors Service report highlighting 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. Adding to the pessimism, the Reserve Bank of India (RBI) reiterated concerns over rising inflationary pressures this fiscal year due to global and domestic pressures and called for continuous vigil to keep them at bay. Sentiments remained subdued as rupee crashed to a new record low of 70.82 against the dollar and crude oil extends gains due to fall in US crude inventories and expected supply disruptions from Iran and Venezuela. However, losses remained capped as traders took some solace with RBI’s 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. Some comfort came with 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. Traders took note with Finance Minister Arun Jaitley’s statement that India is expected to surpass Britain next year to become world's fifth largest economy. Meanwhile, Union minister for road transport and highways, Nitin Gadkari said that India needs foreign investment, especially in infrastructural development, to arrest free fall of Indian rupee that has hurt the economy. Finally, the BSE Sensex slipped 32.83 points or 0.08% to 38,690.10, while the CNX Nifty was down by 15.10 points or 0.13% to 11,676.80.
