Benchmarks to make a mildly soft start on Tuesday

Paring most of the early gains, Indian equity markets ended Monday’s session flat with positive bias on firm global cues, though upside remained capped as investors turned cautious over disappointing macro-economic data and a rise in global crude oil prices. Today, the start of the session is likely to be mildly soft following weakness in its other Asian counterparts amid uncertainty about the future of US-China trade relations. There will be some cautiousness with Crisil cutting India’s growth forecast for current fiscal to 7.4% on the back of weakening GDP growth and lower global trade forecasts. India’s growth in the July-September quarter slipped to 7.1% from 8.2% in the April-June quarter. It added that India’s export, which saw a revival in early part of 2018, could likely see a slower growth. Traders will also be concerned about ICRA’s statement that India’s current account deficit is likely to rise to 3% of GDP in the July-September quarter of current fiscal, from 2.4% in the preceding quarter, driven mainly by high crude oil prices. Traders will also be reacting to a private report that the recent move by the US government to change the method of H-1B visa allotment is a mixed bag for India. It added that while the move is expected to have a negative impact on the Indian technology services industry. Meanwhile, the finance ministry said Rs 91,149 crore has been issued so far to exporters as Goods and Services Tax (GST) refunds, which are 93.77% of total claims with the tax authorities. It also said Rs 6,053 crore worth GST refund is still pending with the government and that is being expeditiously processed.

The US markets ended sharply higher on Monday after President Trump and President Xi Jinping agreed to a temporary truce in the trade war between the United States and China. Asian markets were trading mostly in red on Tuesday as a relief rally sparked by a truce in the US-China trade war gave way to doubts on whether the two countries are able to resolve their differences before a 90-day deadline.

Back home, weak economic data pushed the markets to end flat on Monday’s trading session. The start of the day was marvelous, aided by Niti Aayog Vice-Chairman Rajiv Kumar’s statement that 70 lakh jobs were created in the financial year 2017-18 alone. He said that growth in sales of transport vehicles, huge disbursement of Mudra loans and EPFO data show that enough opportunities for employment. Domestic sentiments were also boosted after the Indian manufacturing sector accelerated further in the month of November, buoyed by healthier inflows of new orders. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - improved to 54 in November from 53.1 in October. Some support also came with Economic Affairs Secretary Subhash Chandra Garg’s statement that foreign investors have put in Rs 10,925 crore in equity and debt instruments in November. FPIs investment at Rs 4,786 crore in equity and Rs 6,139 crore in debt, together at Rs 10,925 crore, is the highest during the financial year. Meanwhile, Newly-appointed Revenue Secretary Ajay Bhushan Pandey said his focus would be to improve the tax-GDP ratio and increase compliance by making the system more taxpayer friendly. However, in noon deals, the key indices turned volatile to end the session flat with marginal gains, impacted by reports that India’s economic growth slowed down 7.1% in July-September quarter (Q2) of current fiscal year (FY19) after touching over a two-year high of 8.2% in April-June quarter (Q1), as consumption demand moderated and farm sector displayed signs of weakness. Traders were also cautious, as Goods and Services Tax (GST) collection dropped to Rs 97,637 crore in November 2018 as compared to Rs 1 lakh crore collected previous month. Of the Rs 97,637 crore collected, central GST (CGST) collection was Rs 16,812 crore, state GST (SGST) was Rs 23,070 crore, integrated GST (IGST) was Rs 49,726 crore (including Rs 24,133 crore collected on imports) and cess was Rs 8,031 crore (including Rs 842 crore collected on imports). Adding more worries, India’s core sector output also grew at a slower pace of 4.8% in October 2018, as compared to 5% in October 2017, due to contraction in the production of crude oil, natural gas and fertilizer. Sentiments also got hit, with the Controller General of Accounts’ latest data report indicating that India’s fiscal deficit, the gap between expenditure and revenue, in the first seven months of current financial year (FY19) came in at Rs 6.24 lakh crore or 103.9% of the FY19 Budget target, on the back of lower revenue collections. Finally, the BSE Sensex rose 46.70 points or 0.13% to 36,241.00, while the CNX Nifty was up by 7.00 points or 0.06% to 10,883.75.