Benchmarks to make optimistic start amid firm global cues

In a volatile trade, Indian equity markets closed higher on Thursday on positive sentiment amid easing crude oil prices and firm rupee. Today, the start is likely to be good on positive global cues and traders will be drawing encouragement with report that India’s exports rose by 17.86% to $26.98 billion in October 2018 as compared to $22.89 Billion in October 2017. Exports bounced back in October to high double-digit figures after the mild contraction in September as engineering goods, pharmaceutical and chemical shipments picked up the pace. During the April-October period of the current financial year, exports grew by 13.27% to $191 billion. However, there will be some cautiousness on report that the trade deficit for the month of October 2018 widened to $17.13 billion v/s $13.98 billion in September on account of import growth again picked up. The deficit widened despite a decline of 42.9% in gold imports to $1.68 billion. Imports during the month also rose by 17.62% to $44.11 billion, leading to widening of trade deficit. Meanwhile, refusing to upgrade India’s credit rating for the 12th year in a row, Fitch has retained its sovereign rating for the country at BBB- the lowest investment grade with a stable outlook, it said that a weak fiscal position continues to constrain the ratings and there were significant risks to macroeconomic outlook.  It also said that India’s real GDP growth is expected to be at 7.8% in FY19, up from 6.7% in FY18 even as the government may find it tough to meet its fiscal deficit target of 3.3%. Besides, RBI board member S Gurumurthy said the stand-off between the government and the Reserve Bank was not a happy situation. He also said imposition of tight provisioning norms for bad loans in one go created problems for the banking system. The Tourism sector stocks will be in action as tourism sector has pledge Rs 6.25 billion of fresh investments during the biennial investors’ conclave- Make in Odisha 2018. The pharmaceutical sector too will be in action as Minister of State for Chemicals and Fertilisers Mansukh Mandaviya said after the implementation of GST, the pharmaceutical sector grew 6% to Rs 1.31 trillion on a year-on-year basis till May 31. There will be some buzz in the sugar stocks on report that Indian sugar mills have produced 10.80 lakh tonne sugar till November 13 as against 19 lakh tonnes they had produced during same period of previous year. The country is expected to produce 324 lakh tonnes of sugar during 2018-19.

The US markets ended higher on Thursday on report that the US and China may step up efforts to resolve their trade conflict, starting with postponing higher tariffs and allowing working level negotiators to iron out a deal. Asian markets were trading mostly in green on Friday as investors gauge whether China and the US can de-escalate their trade spat before the G-20 summit later this month.

Back home, key equity indices logged notable gains in Thursday’s choppy session, with Sensex regaining its crucial psychological level of 35,200. The markets made a volatile start but soon gained traction, with taking support from Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra’s statement that direct tax collection has already crossed Rs 5 lakh crore that is 44% of the net direct tax collection target and will exceed the budgeted target of Rs 11.5 crore set for the current fiscal. He further highlighted that so far the I-T department has issued refunds to 2.15 crore assessees amounting to Rs 1.15 lakh crore and from now onwards the net collections will increase. Domestic sentiments also got boost, with Assocham secretary general Uday Kumar Varma’s statement that expanding investment in infrastructure will generate jobs, promote tourism and play catalytic role in overall growth and development of Indian economy. He also said that the government’s vision for new and improved infrastructure that can serve the nation for a long time. In the last leg of the trade, the markets trimmed some of their gains but managed to keep their heads in green terrain, amid reports report that finance ministry will seek immediate solutions to the issues of micro, small and medium enterprises (MSME) credit and NBFC liquidity in the central bank’s board meeting on November 19. The market participants also took some support with the Confederation of Indian Industry (CII) calling for a change in regulations to improve access to credit for micro, small and medium enterprises (MSME), which the lobby group says are facing increased risk of financial stress due to a liquidity crunch in the market. Some solace also came from top banker Uday Kotak’s statement that the country has been under a lot of pressure due to higher-than-$60 a barrel oil price in last one year but the latest retreat is giving a lot of comfort to India. Finally, the BSE Sensex gained 118.55 points or 0.34% to 35,260.54, while the CNX Nifty was up by 40.40 points or 0.38% to 10,616.70.