Benchmarks likely to open in red; manufacturing PMI data eyed

Erasing all of their initial losses, Indian markets ended the first trading day of 2019 on optimistic note, thanks to a sharp recovery in heavyweight financials in the last hour of trade. Today, the markets are likely to make pessimistic start amid weakness in Asian peers. Investors will be eyeing manufacturing PMI data for the month of December to be out later in the day. There will be some cautiousness with the government once again missing the target of garnering more than one lakh crore rupees from Goods and Services Tax (GST) in the month of December, giving rise to concerns that the government may not be able to contain the fiscal deficit to 3.2% of the GDP. The government has collected Rs 94,726 crore from GST in the month of December. However, traders may get some encouragement later in the day with a report that India remained ahead of China to retain the tag world’s fastest growing large economy withstanding several ups and downs, spike in oil prices and global trade war like situation during 2018. Indian economy’s roller-coaster ride during the year gone by was best captured by the Gross Domestic Product (GDP) growth. In the first quarter of 2018-19 ending June 30, it grew at an impressive 8.2%. Meanwhile, Prime Minister Narendra Modi said the government is in favour of bringing construction related material in the 5% slab of GST, informed that changes in the tax structure will continue as there is scope for improvement. There will be buzz in the micro, small and medium enterprise (MSME) industry stocks with the Reserve Bank of India (RBI) allowing a one-time restructuring of existing debt up to Rs 25 crore for the companies which have defaulted on payment but the loans given to them have continued to be classified as standard assets. The decision will help the MSMEs which are facing cash crunch in the wake of demonetisation and GST implementation. There will be some action in aviation industry stocks with report that jet fuel price was cut by a record 14.7% on the back of decline in international rates, making it cheaper than both petrol and diesel. The price of Aviation Turbine Fuel (ATF) -- used to power airplanes -- was slashed by Rs 9,990 per kilolitre, or 14.7 percent, to Rs 58,060.97 per kl.

The US markets remain closed on Tuesday on account of New Year holiday. Asian markets were trading mostly in red on Wednesday as evidence of slowing Chinese growth weighed on investors already reeling from the worst year for global equities since the financial crisis.

Back home, Indian equity benchmarks greeted New Year with optimistic approach where the Sensex and Nifty reclaiming their crucial psychological levels of 36,200 and 10,900, respectively. After cautious start of the Tuesday’s trading session, the key indices remained lackluster for most part of the day, as the growth of eight core industries slowed to sixteenth-month low of 3.5% in November 2018, as compared to 4.8% in October 2018, due to fall in output of crude oil and fertilisers. The market participants got worried with policy advocacy body US-India Strategic Partnership Forum (USISPF) saying that India’s recent changes in e-commerce foreign direct investment (FDI) rules show a lack of predictability in the regulatory environment and could add to the long list of trade issues that the country is trying to resolve with the United States. Some concerns also came with Ministry of Commerce & Industry’s report that some industry associations including those relating to steel have expressed concerns on imports under bilateral free trade agreements with Japan, Korea and ASEAN. However, steel imports from these countries include high grade steel, which are not manufactured domestically. However, in the last leg of the trade, the markets managed to erase all of their losses and ended the session on positive note, aided by the Finance Ministry’s statement that in order to ensure that the fiscal deficit remains within the target of 3.3% of the Gross Domestic Product (GDP) for 2018-19, the government is closely monitoring the macroeconomic conditions. The Ministry has directed ministries and departments to meet their additional requirements of funds from savings and keep their expenditure within the amount earmarked in the Budget for 2018-19. Trade turned positive, also because of reports that India remained ahead of China to retain the tag world's fastest growing large economy withstanding several ups and downs, spike in oil prices and global trade war like situation during 2018. Some relief also came with Sebi’s data report showing that Indian companies raised over Rs 29,300 crore by issuing non-convertible debentures (NCDs) to retail investors in 2018 to meet their business requirements, representing a three-fold surge compare to the preceding year. Investors took a note of a report stating that the country's external debt fell by $19.3 billion, or 3.6 per cent, to $510.4 billion during the six-month period ended September, due to a decrease in commercial borrowings, non-resident Indian (NRI) deposits and valuation effect. Finally, the BSE Sensex gained 186.24 points or 0.52% to 36,254.57, while the CNX Nifty was up by 47.55 points or 0.44% to 10,910.10.