Markets to make negative start; RBI board meeting eyed

Indian markets extended their gains for third straight session on Thursday on the back of strong macro data and supportive global cues. Besides, heavy buying in capital goods, consumer durables, realty and FMCG stocks too boosted the sentiments. Today, the markets are likely to make negative start amid weak global cues on economic growth concerns. Investors will be looking ahead for cues from the Reserve Bank of India (RBI) board meeting later in the day. The central board of the RBI under new Governor Shaktikanta Das will meet on December 14 where the directors are likely to push for greater say in the decision making of the central bank. Traders will also be eyeing another macro data of wholesale price inflation for November scheduled to be release later in the day. Traders will be concerned about global credit ratings agency Moody’s statement that liquidity constraints faced by some non-bank financial institutions (NBFIs) will likely tighten overall credit supply and slow India’s economic growth rate to just above 7% for the fiscal 2019 and 2020. In addition, any further distress in the Indian NBFI sector will pose significant downside risks to India's growth outlook. Traders may take note of Finance Minister Arun Jaitley’s statement that need to double the size of the economy in next few years. He said ‘we are globally no longer in the high growth economic era which we saw between 2003-08; to achieve 9%, we need global tailwinds and extraordinary domestic growth story’. He added that trade wars, hardening dollar and fluctuating oil create uncertainty. Meanwhile, NITI Aayog chief executive Amitabh Kant said that India’s exports need to increase significantly if the country has to become a $5-trillion economy by 2025. Kant also noted that the private sector will play a major role in pushing the country's economy towards the ambitious $5-trillion target. There will be some buzz in the public sector banking stocks with report that the government is considering additional capital infusion of up to Rs 30,000 crore in public sector banks as they have been unable to raise required funds from the markets. Also, there will be some reaction in cement sector stocks with report that the Goods and Services Tax (GST) Council is likely to rationalise the 28% slab by cutting tax rates on construction items, like cement, in its meeting next week.

The US markets end mostly lower on Thursday as concerns about a creeping economic slowdown weighted on investor sentiments. Asian markets were trading in red on Friday as caution returned and the recent recovery in equities showed signs of losing steam.

Back home, positive macroeconomic data gave enough support to the Indian equity benchmarks on Thursday, as Sensex and Nifty settled higher over 150 and 50 points, respectively. The markets made an awesome start, after India’s industrial production measured by Index of Industrial Production (IIP) surged to 11-month high of 8.1% in the month of October 2018 as against 4.5% in September 2018 and 1.8 percent in October 2017. The trade also remained strong, on the back of easing inflation data. India’s retail inflation based on Consumer Price Index (CPI) cooled down to a 17-month low of 2.33% in the month of November 2018, as compared to 4.88% in the same month of previous year. The inflation softened mainly on account of decline in prices of kitchen essentials like vegetables, eggs and pulses. Meanwhile, Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta urged newly-appointed the Reserve Bank of India (RBI) Governor Shaktikanta Das to ensure smooth flow of credit to exports sector which is falling sharply on year on year basis, affecting the liquidity of exporters particularly the micro, small, and medium enterprises (MSMEs). However, in the last hours of the trading session, the markets trim some of their losses to come off their day’s high points. The street got cautious with World Economic Forum (WEF) founder and executive chairman Klaus Schwab’s statement that India is still in the ‘middle class’ in ease of doing business and the country should work towards creating the necessary ecosystem to boost entrepreneurship. Adding some anxiety among investors, as many as 358 infrastructure projects worth Rs 150 or above, entailing a total investment of Rs 3.53 lakh crore, reported cost overruns as on August 1, 2018. The street took note of DIPP Secretary Ramesh Abhishek’s statement that the government has no proposal to change the existing foreign direct investment (FDI) policy in the multi-brand retail trading sector. But, the indices again rallied to end the day with the notable gains, with taking support from S&P Global’s statement that India’s rapid economic growth will be enough to offset worries about the independence of its central bank and keep its credit rating in the coveted investment grade bracket. Finally, the BSE Sensex surged 150.57 points or 0.42% to 35.929.64, while the CNX Nifty was up by 53.95 points or 0.50% to 10,791.55.