Sensex, Nifty likely to start marginally in green; GDP data eyed

Indian markets ended Thursday’s trading session with notable gains for fourth straight day, as strong rupee and dovish comments from US Federal Reserve Chairman Jerome Powell boosted sentiments. Today, the start of last trading day of the month is likely to be marginally in green as investors will be looking ahead to Gross Domestic Product (GDP) data for the September quarter due later in the day for clues on the strength of domestic economy. Traders will be getting some encouragement with economic policy think-tank the National Council of Applied Economic Research’s (NCAER) report stating that Indian economy is projected to grow at 7-7.4 per cent in the current fiscal. It added that the real agriculture Gross Value Added (GVA) is envisaged to grow at 3 per cent and real industry GVA at 7 per cent in 2018-19. As per the report, the forecast for Gross Value Added (GVA) at basic prices is 7.0-7.4 per cent. These forecasts at constant (2011-12) prices are based on NCAER's annual GDP macro model. Also, there will be some support with a report that the Reserve Bank of India (RBI) on November 29 relaxed rules for non-banking financial companies (NBFCs) to sell or securitise their loan books, in a bid to ease persistent stress in the sector. NBFCs can now securitise loans of more than five-year maturity after holding those for six months on their books. Meanwhile, Niti Aayog Vice-Chairman Rajiv Kumar said that India will have to undertake more reforms and try harder to grow at over 8 per cent. He also pointed out that the government needs to invest more in the country's statistical system. There will be some buzz in the banking sector stocks with the RBI’s statement that Net Stable Funding Ratio (NSFR) norms that mandate banks to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities will be operational from April 2020. The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.

The US markets ended lower on Thursday as participants weighed up the outlook for Federal Reserve policy and looked nervously towards the forthcoming G20 summit in Argentina. Asian markets were trading mixed on Friday as investors await a crucial meeting between the US and Chinese presidents with the course of the trade war at stake.

Back home, Indian equity benchmarks ended November F&O series on strong note on Thursday, with Sensex and Nifty rallying for the fourth day. The start of day was fabulous, as traders reacted positively to a private report that the Reserve Bank of India (RBI) may have to conduct open market operations (OMOs) of another Rs 1,60,000 crore in the fourth quarter of the current fiscal to tide over the banking liquidity crisis. Domestic sentiments remained optimistic, after Commerce and Industry Minister Suresh Prabhu said that the government is taking several steps, such as reducing regulatory burden and ensuring availability of adequate funds, for budding entrepreneurs to promote startup ecosystem in the country. Some comfort also came with private report stating that the RBI won't raise interest rates until at least April, much later than thought just one month ago and rise will probably be a one-and-done. The key indices maintained their gaining momentum throughout the session to end near their intraday high points, aided by positive cues from global markets. In late noon deals, the street took note of Niti Aayog Vice-Chairman Rajiv Kumar’s statement that India will have to undertake more reforms and try harder to grow at over 8%. He also pointed out that the government needs to invest more in the country’s statistical system. But, investors paid no heed towards reports that Former Chief Economic Advisor Arvind Subramanian called demonetisation a massive, draconian, monetary shock that slowed economic growth to average 6.8% in the seven quarters following the move as against the 8% average growth recorded in six quarters before it. Meanwhile, the RBI’s data showed that India Inc’s foreign borrowings dipped nearly 66% to $1.41 billion in October this year. Finally, the BSE Sensex surged 453.46 points or 1.27% to 36,170.41, while the CNX Nifty was up by 129.85 points or 1.21% to 10,858.70.