Benchmarks to make pessimistic start

Snapping three-day losing streak, Indian markets ended sharply higher on Monday, with Sensex and Nifty gaining around a percent each, as firm Asian cues and a persistent decline in global crude oil prices buoyed investors sentiment. Today, the markets are likely to make pessimistic start taking cues from other Asian peers amid rebound in crude oil prices. Traders will be concerned about a SBI research report stating that the Gross Domestic Product (GDP) growth in the September quarter is expected to decelerate to 7.5-7.6% over the previous three-month period mainly due to a slowdown in rural demand. Also, there will be negative reaction on India Ratings and Research’s statement that India is set to miss its fiscal deficit target for the year ending March 2019 due to a shortfall in revenues and lower-than-targeted disinvestment proceeds. The country’s 2019 fiscal deficit target has been pegged at 3.3% of its GDP or 6.24 trillion rupees ($88.45 billion). But the credit rating agency estimated fiscal deficit at 6.67 trillion - or 3.5% of GDP. Meanwhile, Indian companies raised funds worth Rs 36,176 crore by issuing securities on public and private placement basis during October, registering a decline of 17% compared to September. However, traders may take some support later in the day with the think-tank’s Vice-Chairman Rajiv Kumar’s statement the Niti Aayog is exploring ways to encourage more domestic companies to be among the top multinational corporations in the world. Moreover, the commerce ministry has recommended continuation of anti-dumping duty for five years on a chemical used in pharma and agro industries, imported from the European Union and the US. There will some buzz in the banking sector stocks with report that the government will infuse Rs 420 billion in the state-owned banks by March-end and the next tranche would be released as early as next month.

The US markets ended higher on Monday as shares of some beaten-down tech companies rebounded after posting steep losses last week. Asian markets were trading mostly in red in early deals on Tuesday as President Donald Trump discussed plans for further China tariff increases in the absence of a trade deal.

Back home, the equity benchmarks bounced back on Monday to close on positive note, after falling for last three trading sessions. The Bourses begun the week well, buoyed by the Organization for Economic Cooperation and Development’s (OECD) statement that India’s economy will grow close to 7.5% in 2019 and 2020. India’s gross domestic product (GDP) grew 6.7% in 2017-18. However, the trade soon turned volatile, amid India Ratings (Ind-Ra) latest report that a change of even $1 per barrel would impact India’s import bill by Rs 6,160 crore, as the country continues to be a large importer of crude oil. India meets over 80% of its oil demand through imports. Adding some anxiety among traders, National Green Tribunal chairman Justice Adarsh Kumar Goel stated that India has earned its pride of place in the world with its economy growing very fast but a large number of people still live below the poverty line. The country had no doubt achieved growth but it was not enough to meet the aspirations of the freedom fighters who had drafted the Constitution. Meanwhile, West Bengal Finance Minister Amit Mitra said that demonetisation and faulty implementation of the GST have caused a loss of Rs 4.75 lakh crore to the country's economy. But, in the second half of the session, the markets gained traction to settle near their day’s high points, following firm global markets. Domestic sentiments got boost with the report stating that foreign investors have pumped in Rs 6,310 crore into Indian capital markets this month so far, after pulling out massive funds in October, on easing crude oil prices and a strengthening rupee. Some comfort also came with a private report indicating that the Reserve Bank of India (RBI) is expected to keep the key policy rates unchanged at its ensuing policy review meet next month, amid easing global crude oil prices and robust agriculture production. Investors were seen taking support with the RBI’s report that the country’s foreign exchange reserves rose by $568.9 million to $393.580 billion in the week to November 16, mainly due to a spurt in foreign currency assets. Adding some relief, SBI Research report stated that following decline in oil prices, the country’s current account deficit (CAD) is expected to touch 2.6% of GDP in the current fiscal against an earlier expectation of 2.8%. Besides, the market participants took note of Economic Affairs Secretary Subhash Chandra Garg’s statement that the RBI should provide more liquidity to non-banking finance companies (NBFCs) in a bid to boost lending. Finally, the BSE Sensex surged 373.06 points or 1.07% to 35,354.08, while the CNX Nifty was up by 101.85 points or 0.97% to 10,628.60.