Benchmarks to make optimistic start following positive global cues

Extending gains for second straight session, Indian equity markets ended Thursday’s trading session on positive note, tracking rally in global stocks. Buying in IT, fast-moving consumer goods and energy stocks also pushed the markets higher. Today, the markets are likely to make optimistic start following positive global cues. There will be some support with report that under attack for the agrarian crisis, the government is contemplating several incentives, including a big financial package, to woo farmers ahead of the 2019 Lok Sabha elections. The government is looking at a sort of income support scheme for farmers, along with tweaking some existing programmes, to make them more beneficial and improve their acceptability among growers. Traders may take note of a private report that the new foreign direct investment (FDI) policy in the e-commerce sector may not impact jobs immediately. The new FDI policy released by the government on December 26 aims to protect the interests of local businessmen, who had accused the online marketplaces of butchering their revenue. However, some cautiousness may come later in the day with report that the central government’s fiscal deficit widened further in November after crossing the budgeted target last month due to slower-than-expected growth in indirect tax collection. The Controller General of Accounts’ data showed that the fiscal deficit stood at Rs 7.17 trillion at the end of November 2018, 114.8% of the budgeted target of Rs 6.24 trillion. There will be some cautiousness with India Ratings’ report that the farm loan waivers announced by various states, including Madhya Pradesh, Rajasthan and Chhattisgarh, will adversely impact the combined capital spending of the states. For the current fiscal, states’ capex is budgeted to be higher by 37.5%. It was 36.6% higher as per FY18 revised estimates. There will be some buzz in the public sector banks (PSBs) stocks with report that the government is likely to infuse Rs 28,615 crore into seven PSBs through recapitalisation bonds by the end of this month. The amount infused will help the banks meet regulatory capital requirement, and its disbursement might take place before December 31. There will  be some reaction in automobile sector stocks with the government’s statement that the country’s automobile sector, which attracted $16.5 billion in FDI between April 2000 and December 2016, is expected to attract $8-10 billion more in local and foreign investments by 2023.

The US markets ended Thursday’s volatile trading session in green, adding to the massive gains of the previous session, on the back of late hour buying. Political uncertainty left the markets fluttering throughout the day. Asian markets were trading mostly higher on Thursday, as investors heartened by Wall Street’s best performance in nine years after the White House said Fed Chair Jay Powell would not be fired.

Back home, Indian equity bourses ended higher on the last day of the December series of derivatives contracts, with both Sensex and Nifty surging around 0.45% each, amid firm global markets. The start of the Thursday’s trading session was positive, buoyed by Reserve Bank of India study report showing that Private sector non-finance firms reported a 41 per cent growth in net profits during the July-September quarter, despite higher expenditure as other income contributed to growth. Domestic sentiments got boost with a private report that with global crude oil prices slumping to below $50 a barrel just months after crossing $86, the Prime Minister Narendra Modi-led government is now confident that the current account deficit (CAD) for 2018-19 (FY19) can be contained at about 2 per cent of gross domestic product (GDP). Some support also came in after another private report that the government is likely to infuse Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds by the end of this month. The amount infused will help the banks meet regulatory capital requirement, and its disbursement might take place before December 31. The markets remained in green throughout the session, as buying got intensified with the commerce and industry minister Suresh Prabhu’s statement that that India will aim to receive $100 billion of foreign direct investments (FDI) in the next two years, from different sectors. He also noted that the country would remain a top destination for foreign investors in the next year 2019. Some relief also came after the government said that PSBs reported recovery of Rs 60,713 crore against non-performing assets (NPAs) in the April-September period (H1) of current fiscal year (FY19). It added that this is double of the amount recovered in the corresponding period last year and more significant returns on high-value accounts are expected. But, in the last hour of the trade, some of the markets gains got trimmed, with India Ratings and Research’s report stating that farm loan waivers announced by a number of states recently will adversely impact the combined state government capex spending. Investors took note of Corporate Affairs Secretary Injeti Srinivas’ statement that insolvency law is a game-changer but non-adherence to timelines and inordinate delay in admission of cases are major concerns. He also said the law has already impacted the behaviour of borrowers and lenders. Finally, the BSE Sensex surged by 157.34 points or 0.44% to 35,807.28, while the CNX Nifty was up by 49.95 points or 0.47% to 10,779.80.