Markets likely to make pessimistic start

Giving up most of the early gains, Indian markets ended marginally higher on Tuesday, with gains in IT and energy stocks slightly outweighing losses in banking counters, tracking gains in Asian markets. Today, the markets are likely to pessimistic start following weak global cues. Traders will be concerned about Moody’s Investors Service’s statement that Indian economy will expand 7.4% in 2018, but the growth will slow down to 7.3% in the next year as domestic demand tapers on higher borrowing cost due to rising interest rates. It said the greatest downside risk to India's growth prospects stem from concerns about its financial sector. Also, there will be some cautiousness with a private report stating that unemployment rate in the country rose to 6.9% in October - the highest in two years. The estimated number of people employed during October 2018 was 397 million. This was 2.4% lower than the rate in October 2017. Meanwhile, the finance ministry said that GST refund of Rs 82,775 crore to exporters has been cleared as on October 31, which is 93.8% of the total such claims with the tax authorities. The ministry said Rs 5,400 crore worth GST refund is still pending with the government and that is being expeditiously processed. There will be some buzz in the infrastructure related stocks with report that the Reserve Bank has liberalised the norms governing foreign borrowings for infrastructure creation in consultation with the Government. As per the notification, the minimum average maturity requirement for ECBs (external commercial borrowings) in the infrastructure space raised by eligible borrowers has been reduced to three years from earlier five years. Also, there will be some reaction in textile sector stocks with the Cotton Textiles Export Promotion Council’s (Texprocil) statement that India’s cotton textile exports grew by 26% at $6,235 million in the first six months ended September 2018 and the on-going trade war between US and China will open up new export opportunities.

The US markets ended mostly lower on Thursday as the Federal Reserve kept interest rates unchanged in an unanimous decision and signaled that it would continue to tighten monetary policy at a gradual pace. Asian markets were trading in red Friday after the Federal Reserve held rates on Thursday, with a dollar rally cooling off in morning trading.

Back home, Indian equity benchmarks managed to end Tuesday’s session on positive note, despite mixed cues from global markets. The markets made a cheerful opening with a private report stating that the government has generated higher-than-expected revenues from customs duties, which may help it rein in the fiscal deficit within its FY19 target of 3.3% of gross domestic product (GDP). Optimism spread among the markets participants, with rating agency Crisil’s report that the rupee may appreciate to 71 against the dollar by March 2019 on positives like the dip in crude prices and the $75-billion currency swap with Bank of Japan. Some relief came from S&P Global Ratings’ latest report indicating that most of its rated Indian firms and banks can survive the recent sharp fall in the rupee since their overseas borrowings either have dollar-linked earnings or are hedged. Market participant also took note of a report stating that over 100 Indian investors participated in a business conference in the UAE to strengthen Sharjah’s trade relations with India and to promote the Gulf emirate as a leading business and investment hub in the region. In the last leg of trade, the key indices turned volatile, as Finance Minister Arun Jaitley said that excessive competition at times can result in stress in a particular sector. He also said that with the growing economy, the role of each regulator will expand. But, the markets managed to end higher, with taking support from the Textiles Minister Smriti Irani’s statement that the Indian economy would become bigger and stronger than the British economy in the next couple of years and added that the country is moving towards economic empowerment. Some support also came with the Union Minister for Finance and Corporate Affairs Arun Jaitley’s statement that fair and Transparent Public Procurement will protect the revenues of the State and make sure that they are used for optimal purpose. Investors’ sentiments remained optimistic with report stating that the United States snapped sanctions back in place to choke off Iran's oil and shipping industries, while temporarily allowing top customers such as China and India to keep buying crude from the Islamic Republic. Finally, the BSE Sensex surged 40.99 points or 0.12% to 34,991.91, while the CNX Nifty was up by 6.00 points or 0.06% to 10530.00.