Benchmarks likely to make gap-down opening on Thursday

Extending gains for seventh straight session, Indian markets ended higher on Wednesday after oil prices plunged and the Reserve Bank of India (RBI) decided to inject more liquidity into the system, helping spur optimism about India’s growth story. Today, the markets are likely to make gap-down opening tacking sell-off in the global markets. There will be some cautiousness with the US think-tank National Bureau of Economic Research’s (NBER) report that the November 2016 demonetisation impacted economic activity in the country in the immediate aftermath, affecting the Gross Domestic Product (GDP) numbers for that fiscal, while the measure's impact had dissipated by the summer of the following year. Traders will also be concerned about the World Bank’s latest report stating that India lost a staggering $86.1 billion, equivalent to over 4% of its GDP, owing to distortions in the power sector in 2016. It added that although India has achieved 100 per cent village electrification earlier this year, 178 million Indians still remain unconnected to the grid as per figures for 2017. Traders may react to the government think-tank Niti Aayog’s statement that farm loan waiver a move helps only a fraction of farmers and is no solution to mitigate agrarian distress. However, some support may come later in the day with the NITI Aayog unveiling a strategy document with an aim to accelerate economic growth to 8% and catapult the country to a $5-trillion economy by 2030. Laying down a multi-pronged strategy to promote the country's overall development, the document said the annual growth rate of 9 per cent by 2022-23 would be essential for generating sufficient growth and achieving prosperity for all. There will be some buzz in public sector banks (PSBs) stocks with Economic Affairs Secretary Subhash Chandra Garg’s statement that the government is likely to make additional capital infusion in the PSBs. This will be over and above Rs 1.35 lakh crore capital infusion announced by the government for the PSBs in October last year to meet global capital risk norms called Basel III. There will be some reaction in agriculture related stocks with Crisil expressing concerns on an over 5% dip in sowing for winter crops, which account for the bulk 40% of the nation's annual agricultural output, amid reports of rising rural distress. There will be some buzz in the insurance sector stocks with Moody’s Investors Service’s statement that the new regulations for re-insurance in India are credit-positive. It said they will improve Indian insurers’ access to a broader reinsurance base, which will support their management of underwriting risk and performance.

The US markets ended lower on Wednesday after the Federal Reserve raised interest rates for the fourth time in 2018 and signaled a milder path of increases over the next year. Asian markets were trading in red on Thursday following the overnight sell-off on Wall Street. Investors are also cautious ahead to the Bank of Japan’s monetary policy decision due later in the day.

Back home, jubilation continued for the seventh straight session on Wednesday, with both the larger peers, Sensex and Nifty, ending with notable gains. The markets made a positive start of the day, as traders took engorgement with Union Minister of Commerce and Industry Suresh Prabhu’s statement that India will be 5 trillion dollar economy in coming 7-8 years and already have complete road-map for it. Domestic sentiments also remained optimistic with chairman designate of Central Board of Indirect Taxes and Customs P K Das’ statement 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. Adding more enthusiasm, Finance Minister Arun Jaitley released the NITI Aayog's strategy for New India, a paper envisaging goals for the country in the 75th year of its Independence in 2022. According to the NITI Aayog strategy paper, the government aims to increase India's tax-to-GDP ratio to 22 per cent and accelerate economic growth rate to 8 per cent. Besides, investors took 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. The trade remained positive during the whole day, tracking firm global cues. Traders were seemed taking encouragement with Union Minister Giriraj Singh’s statement that the government will set up 20 additional technology centres to help micro, small and medium enterprises (MSMEs). These centres support MSMEs by giving them access to advanced manufacturing technologies, skilling manpower and providing technical and business advisory support. Investors paid no heed towards a private report stating that the overall consumer confidence has slipped in the month of December, with liquidity crunch, high inflation and rising interest rates leading to pessimism. The India Primary Consumer Sentiment Index (Consumer Confidence) has dropped by 0.6% over the previous month of November, signalling growing pessimism about the future prospects of the economy. The market participants even overlooked another 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. Finally, the BSE Sensex surged 137.25 points or 0.38% to 36,484.33, while the CNX Nifty was up by 58.60 points or 0.54% to 10,967.30.