Markets likely to open in green on Thursday

The Indian markets ended Wednesday’s choppy trading session with marginal losses as investors remained on sidelines ahead of US Federal Reserve’s policy outcome. Today, the markets are likely to make positive start but trading is likely to be volatile on the back of futures and options (F&O) expiry of September contracts later in the day. Traders will be getting some encouragement with The United Nations Conference on Trade and Development (UNCTAD) expecting India’s economy to grow 7% in calendar year 2018 compared with 6.2% in 2017. The body said that an expansion in services and higher demand for exports has led to a moderate recovery in industrial production in its Trade and Development Report. There will be some support with Finance Minister Arun Jaitley’s statement that India has large avenues of growth to sustain a GDP increase of 7-8 per cent for two decades, unlike any other major economy. However, there will be some cautiousness with a United Nations trade report stating that the world economy remains on a shaky ground a decade after the 2008 financial crisis as the global economic growth is spasmodic and many economies are operating below potential. Meanwhile, the government has raised import duties on 19 items, including jet fuel and air conditioners, as it looks to check the widening current account deficit resulting from high crude oil prices and the rupee dipping to a historic low. The enhanced duty rates, which will make these imported goods expensive, will come into effect from midnight of September 26-27. There will be some buzz in banking sector stocks with the Finance Ministry’s statement that it would examine the capital demands raised by public sector banks including Punjab National Bank and Central Bank. Also, there will be some reaction on telecom sector stocks with report that the government expects to attract $100 billion in investments and generate four million jobs in the telecom sector as it approved a new policy for the industry. The policy also envisages 50 Mbps of broadband connectivity to every citizen in five years.

The US markets ended lower on Wednesday after the Federal Reserve confirmed it would continue to embark on tighter monetary policy. Asian markets were trading mixed in early deals on Thursday as investors assessed commentary from the Federal Reserve that reaffirmed the US economy is strong enough to warrant another interest-rate increase by the end of this year.

Back home, Indian equity benchmarks ended the sluggish day of trade with marginal losses, as traders remained on sidelines ahead of September F&O expiry session due on Thursday. Investors will also keenly watch US Fed meet outcome due later in the day for fresh cues in the markets. Markets soon after a positive start turned negative, as street got cautious with a private report stating that even though India’s economy is growing at a fast pace, the ‘higher educated’ are reporting the highest rate of unemployment against the national average. The report also revealed that the unemployment scenario is most ‘severe’ in the northern states of the country. Afterwards, markets traded in a tight band as some concerns came with another private report stating that after US, India is likely to suffer highest economic damage from climate change. The report further noted that Carbon dioxide emissions are costing the Indian economy up to $210 billion every year. Traders failed to get any sense of relief the commerce ministry’s report that India will impose duties on imports within the norms of the World Trade Organisation (WTO) to protect domestic industry and boost the economy. However, losses remain capped with report that India’s fiscal deficit during the first five months (April-August) of the current fiscal (FY19) has shown improvement. The fiscal deficit stood at 94.7% of the Budget Estimate (BE) at August-end of FY19, better than 96.1% of BE at August-end of the last financial year. Traders also got some relief with the commerce and industry ministry stating that the government’s export promotion measures, implementation of minimum standards for imports, and continued healthy inflow of remittances by non-resident Indians will help control the country’s rising current account deficit (CAD). Market participants also got some comfort with report that maintaining India’s growth forecast at 7.3% for 2018, an international development finance institution, Asian Development Bank (ADB) has said that the economy continues on a robust growth path and is likely to grow at 7.6% during 2019, as goods and services tax and demonetisation effects abate as expected. Finally, the BSE Sensex declined 109.79 points or 0.30% to 36,542.27, while the CNX Nifty was down by 13.65 points or 0.12% to 11,053.80.