Benchmarks set for positive opening on Wednesday

Indian markets wiped out all of their early losses to end Tuesday trading session in green territory for sixth straight day buoyed by gains in financials and oil marketing companies after benchmark crude prices hit a 14-month low. Besides, strong rupee also boosted investor sentiments. Today, the markets are likely to open in green tracking a sharp fall in crude oil prices, easing macro concerns. Traders will be getting encouragement with the Reserve Bank of India’s (RBI) statement that it has decided to scale up the amount of liquidity infusion by Rs 10,000 crore to Rs 50,000 crore this month after a review of the evolving liquidity conditions. The RBI also announced to conduct the purchase of government securities under Open Market Operations (OMOs) for Rs 150 billion on December 20. Some support may also come with chairman designate of Central Board of Indirect Taxes and Customs P K Das saying that the next three months would see the Centre put in place changes in policy and procedures to ensure India further improves its position in the Ease of Doing Business Report-2019. Traders may take note of Niti Aayog CEO Amitabh Kant’s statement that achieving double digit growth in the manufacturing sector on sustainable basis is a doable challenge, but for that the country needs to integrate with global markets. However, there will be some cautiousness with a private report that the government’s note ban decision shaved off economic growth by at least 2 percentage points for the October-December quarter of 2016 in which the demonetisation move was effected. Meanwhile, India has been ranked 108th in World Economic Forum (WEF) gender gap index, same as 2017, while recording improvement in wage equality for similar work and fully closing its tertiary education gender gap for the first time. There will be some buzz in the sugar sector stocks with report that a delegation of domestic sugar industry held discussions with top representatives of all three sugar refineries of South Korea in Seoul with a view to increase shipment of the commodity. South Korea imports around 1.5 million tonnes of raw sugar annually and the Indian sugar industry is making efforts to export raw sugar from India during 2018-19 sugar season.

The US markets ended slightly higher on Tuesday on the back of bargain hunting, with traders picking up stocks at reduced levels on the heels of the sharp drop seen over the two previous sessions. Investors remained cautious ahead of the US Federal Reserve’s monetary policy decision due later in the day. Asian markets were trading mixed on Wednesday following a volatile session on Wall Street.

Back home, the equity benchmarks staged smart recovery on Tuesday to end the session in green terrain, on account of late hour value buying. After a weak start, the markets remained in red territory for the most part of the session, impacted by former Reserve Bank of India (RBI) Governor Raghuram Rajan’s statement that at a time when the world economy was growing, demonetisation slowed down India’s economic growth and impacted the GDP significantly. Domestic sentiments also remained dampened with S&P Global Ratings’ statement that the increasing involvement of the government in the affairs of the Reserve Bank of India (RBI) could undermine the hard-fought improvements in the banking system over the past few years. It termed the exit of Urjit Patel as credit negative. Sentiments got hit with reports that the Central Goods and Services Tax (CGST) department has detected a fraud of GST and Input Tax Credit (ITC) in the metal scrap business across Madhya Pradesh, Maharashtra and Gujarat. The fraud amount is likely to around Rs 200 crore. Some concerns was also due to a private report stating that despite the electoral reverses in key states faced by the ruling BJP, the Union government is unlikely to announce any large farm loan waiver or fiscal sops ahead of general elections. Traders also took a note of Engineering exporters’ body EEPC India stating that exporters are facing the threat of losing refunds and a possible action by the Enforcement Directorate as banks are not issuing remittance receipts despite submission of required documents. However, the key indices erased all of their losses to settle higher, continuing gaining rally for the sixth straight session, despite weak trend in global markets. The street got relief with Prime Minister Narendra Modi’s statement that his government wants to ensure that 99 percent things attract sub-18 per cent GST slab, indicating further simplification of the GST is on the anvil. The markets participants took support with the Ministry of Commerce’s latest report showing that India’s Foreign Direct Investment (FDI) increased constantly to $60.97 billion in the financial year 2018 (FY18) from $45.15 billion in Financial year 2015 (FY15). Further, adding some comfort among the traders, the Export Import Bank of India (Exim Bank) said the country's export growth will surge to 7 percent for the October-December quarter. The Exim Bank estimate said merchandise exports will go up to $82.39 billion for the third quarter of the fiscal year, as against $77 billion. Investors took note of Commerce and Industry Minister Suresh Prabhu’s statement that huge investment opportunities exist in India in various sectors including construction for Turkish companies. Meanwhile, Niti Aayog Vice Chairman Rajiv Kumar said that there is a need to identify and remove impediments that are stopping India from achieving a competitive advantage in global markets. It is time to bring the global trends to domestic market and make Indian manufacturing an exporting sector as it is an essential growth enabler. Finally, the BSE Sensex surged 77.01 points or 0.21% to 36,347.08, while the CNX Nifty was up by 20.35 points or 0.19% to 10,908.70.