Sensex, Nifty to open in green on positive global cues

Indian markets ended Tuesday’s choppy trading session on positive note for the third straight day on widespread buying towards the fag-end amid fresh inflows by foreign funds and positive global cues. Today, the markets are likely to make positive start tacking firm global cues amid optimism on the potential for progress in trade talks between Washington and Beijing. Traders will be getting encouragement with the World Bank’s forecast that India’s Gross Domestic Product (GDP) is expected to grow at 7.3% in the fiscal year 2018-19, and 7.5% in the following two years. It said the growth is attributed to an upswing in consumption and investment. The bank said India will continue to be the fastest growing major economy in the world. Some support will also come with the finance ministry’s statement that the recovery of evaded indirect taxes shot up in 2018-19, after a low in 2017-18, the year when the goods and services tax (GST) was implemented. Recovery as a percentage of the evaded taxes dropped from 26% in 2016-17 to 14% in 2017-18. Then, it went up to 29% in 2018-19 (April to December period). Traders may take note of a report that the central government has released Rs 48,202 crore as GST compensation to states during April-November 2018, higher than the Rs 48,178 crore paid in the previous financial year. There will be some buzz in the banking sector stocks with ICRA’s report that the government decision to infuse Rs 41,000 crore more capital into the state-run banks is positive for these lenders as it will help them lower their losses on dud loans. With this round, the overall capital infusion into state-run banks during FY15-FY19 stands at Rs 2.56 trillion. There will be some reaction in gems and jewellery sector stocks with a private report indicating that India’s gold imports have declined by 14.5% in 2018 to 759 tonnes from 876 tonnes the previous year. The reasons are sluggish demand, changes in regulations such as alteration of criteria for nominated agencies to import gold and the ban on export of 24 carat jewellery to stop misuse. Also, there will be buzz in the power sector stocks with report that power plants across the country generated 1,047.3 billion units (BU) of electricity in April-December, 2018, registering a 6.7% year-on-year (y-o-y) growth.

The US markets ended considerably higher on Tuesday on signs of progress between the US and China on trade negotiations. Asian markets were trading in green on Wednesday, supported by optimism the United States and China can strike a trade deal to avoid an all-out confrontation that will severely disrupt the global economy.

Back home, higher gross domestic product (GDP) growth forecast kept Indian equity benchmarks higher for the third straight session on Tuesday. The Central Statistics Office (CSO) in its First Advance Estimates of National Income, 2018-19, showed that India’s economic growth is expected to grow at 7.2% in the current fiscal year (FY19) from 6.7% in the previous fiscal, mainly due to improvement in the performance of agriculture and manufacturing sectors. The start of the trading session was cautious, impacted by Credit ratings agency, Crisil Ratings’ latest report that India Inc is likely to register fall in revenue as well as profit growth numbers in Q3 (October-December) of 2018-19. Attributing the estimate mainly to high base in general and certain sector specific issues, it said that revenue growth will dip by up to 5 percentage points on average to 12-13%. The trade remained volatile for most part of the session, as Reserve Bank of India (RBI) governor Shaktikanta Das warned against farm loan waivers, saying a generalised loan waiver adversely hits the credit culture and suggested that states should look at their fiscal position before announcing these amnesty schemes. However, in the last leg of the trade, the markets gained momentum to end with notable gains, as Economic Affairs Secretary Subhash Chandra Garg described the 7.2% GDP growth projection for 2018-19 as very healthy and noted that India remains to be the fastest growing economy in the world. Garg also highlighted that increase in gross fixed capital formation (GFCF) indicates a pickup in investment activities. Traders were seen taking encouragement with the Finance Ministry’s latest report indicating that in the first nine months (April-December) of current financial year (FY19), the direct tax collections surged by 14.1% to Rs 8.74 lakh crore. During the same period, the refunds amounting to Rs 1.30 lakh crore have also been issued, an increase of 17% from the year-ago period. Some comfort also came with a private report expecting that the government to maintain fiscal deficit target of 3.2-3.3%. Meanwhile, RBI Governor Shaktikanta Das has said that necessary steps will be taken by the central bank if there is a liquidity shortage in the economy. Das also said that he will meet representatives of non-banking finance companies to understand the liquidity crunch the sector is facing. Finally, the BSE Sensex gained 130.77 points or 0.36% to 35,980.93, while the CNX Nifty was up by 30.35 points or 0.28% to 10,802.15.