Benchmarks to make optimistic start on penultimate session of F&O expiry

Indian markets settled higher for second straight session on Tuesday, with Sensex reclaiming 35,500 mark, as falling oil prices and an appreciating rupee boosting investors sentiment. Today, the markets are likely to make optimistic start amid positive leads from Wall Street following the developments in US-China trade deal after White House economic adviser Larry Kudlow said a meeting between the two was an opportunity to turn the page on a trade war. Traders will be getting encouragement with a report that the Reserve Bank of India (RBI) Governor Urjit Patel told law makers that the note ban’s impact was transient and the economy is robust. He said the economy would get a boost from oil prices cooling off from four-year highs and asserted that the fundamentals were robust. Also, there will be some support with Commerce and Industry Minister Suresh Prabhu’s statement that he has taken up the issue of declining credit to exporters with the finance ministry to ensure adequate availability of funds to them. Meanwhile, the Reserve Bank of India has decided to inject a higher amount of Rs 40,000 crore through purchase of government securities under open market operations (OMOs) in December 2018. However, there may be cautiousness with a private report that the collections from goods and services tax (GST) was projected to be Rs 12 trillion in the current financial year. In other words, each month is expected to yield Rs 1 trillion from GST on an average. However, only two months - April and October - have so far hit the monthly target. There will be some reaction in telecom sector stocks with report that regulator Trai will meet top officials of telecom companies on November 28 to discuss the major issues that should be taken up for deliberation during 2019. Also, there will be some buzz in power sector stocks with report that stressing on tough steps to reform power sector, Niti Aayog CEO Amitabh Kant pitched for ban on use of fossil fuel based gensets saying that the government needs to do it before a court order six months down the line.

The US markets ended Tuesday’s choppy session in green territory as comments from President Donald Trump’s top economic advisor sparked some hope the US and China will strike a compromise on trade. Asian markets were trading mixed on Wednesday as risk assets rowed back amid conflicting signals on prospects for de-escalating the Sino-US trade dispute.

Back home, equity benchmarks remained in better form for the second straight session on Tuesday, with Sensex and Nifty surpassing their crucial psychological levels of 35,500 and 10,650, respectively. After a cautious start, the markets remained volatile during first half of the session, with 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. Adding some concerns, SEBI’s latest report showed that 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. Domestic sentiments were impacted by 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. However, key indices recovered from the losses to build notable gains in the second half of the session, supported by 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. Some comfort also came with CRISIL Research expecting 2018-19 to be a good one for India’s small and medium enterprise (SME) leather exporters, given a pick-up in demand from the US and expectations of the Donald Trump administration imposing tariffs on Chinese leather footwear - not in the tariff list currently - early next calendar year. Adding more comfort, International Labour Organisation (ILO) report showed that India recorded the highest average real wage growth in South Asia during 2008-17. The report also showed that in South Asia, India led the average real wage growth in 2008-17 at 5.5 against a regional median of 3.7. Finally, the BSE Sensex surged 159.06 points or 0.45% to 35,513.14, while the CNX Nifty was up by 57.00 points or 0.54% to 10,685.60.