Markets to make optimistic start ahead of IIP data

Snapping four-day winning streak, Indian markets ended near intra-day low levels on Thursday on selling in banking shares amid negative cues from other Asian markets coupled with jump in oil prices. Today, the markets are likely to make optimistic start tacking firm global cues. Traders will be looking ahead to the Index of industrial production (IIP) data for the month of November to be released later in the day. Traders will be getting encouragement with report that the Goods and Services Tax (GST) Council approved a series of measures aimed at benefiting small businesses, such as a doubling of the exemption threshold to Rs 40 lakh and an increase in the turnover limit for service providers looking to avail of the low-compliance composition scheme. The higher turnover cap of Rs 1.5 crore, against the earlier Rs 1 crore, for availing composition scheme of paying 1 percent tax will be effective from April 01. While the exemption limit for registration and payment of GST has been raised to Rs 40 lakh from Rs 20 lakh for suppliers of goods, states would have flexibility to decide on one of those in a week. Some support may also come with Commerce Minister Suresh Prabhu’s statement that the government is considering providing transport subsidy to states for promoting agriculture exports. On credit issues being faced by exporters, he said, the financial services secretary would hold meeting with banks on the matter. However, there may be some cautiousness with a private report indicating that in the first eight months of FY 2018-19, India's fiscal deficit target has overshot by 15 percent, largely due to a revenue shortfall rather than front-loading of expenditure. It added that the current run-rate of the government’s GST revenues is tracking a shortfall of Rs 70,000-80,000 crore against the annual budget. Meanwhile, the Securities and Exchange Board of India (SEBI) announced portfolio concentration norms for equity exchange-traded funds (ETFs) and index funds. SEBI’s new guidelines are meant to address risks related to portfolio concentration in ETFs and index funds. According to the new norms, the index shall have a minimum of 10 stocks as its constituents. There will be some important earnings announcements also to keep the markets buzzing. Infosys will release its financial results for the third quarter of FY19 later in the day.

The US markets ended higher on Thursday after Federal Reserve Chairman Jerome Powell reiterated the central bank’s willingness to adjust its pace of interest-rate increases if economic conditions weaken. Asian markets were trading in green on Friday in early deals, after Federal Reserve Chairman Jerome Powell reiterated the US central bank can be patient on raising interest rates further.

Back home, profit booking in the recent gainers spoiled the four-day upward rally of Indian equity benchmarks on Thursday. After a cautious start, the markets remained lackluster throughout the session, tracking weak global markets. Trading sentiments got hit with Engineering Exports Promotion Council’s (EEPC) statement that there was a sharp annualised drop of over 54% in the gross bank credit deployment in the export sector. It further noted that the Reserve Bank and the government need to ensure timely and affordable bank credit for exporters to boost outbound shipments. The market participants were seen taking note of the World Bank CEO Kristalina Georgieva’s statement that in this more challenging environment, developing economies like India, must get ready to cope with possible turbulence and to build fiscal and monetary space, to build policy buffers. She also said that the growth of the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018. Traders remained pessimistic even though the Federation of Indian Chamber of Commerce and Industry (FICCI) and PwC in their latest survey report showed that India Inc expects Indian economy likely to grow over 7% in the next 12 months on the back of a number of policy initiatives taken by the government. In the second half of the session, the key indices extended their losses to end near intraday low points, on account of continuous selling on the counters. The market participants failed to take any sense of relief with a private report indicating that India's December retail inflation is expected to have eased to its lowest since June 2017 as food costs fell and fuel prices rose at a slower pace, giving the central bank breathing space to keep policy on hold. Investors even overlooked rating agency ICRA’s report that toll collections are likely to witness a double-digit growth in the next financial year, propelled by an increase in commercial vehicle sales and wholesale price index (WPI). The street even failed to take encouragement with Finance Minister Arun Jaitley’s statement that the government's electric mobility programme will promote manufacturing and job creation and reduce dependency on oil import, besides reducing pollution. He underlined that electric mobility is an attractive, sustainable and profitable solution to mitigate adverse impact of climate change and the threat to public health caused especially by vehicular emission. Finally, the BSE Sensex lost 106.41 points or 0.29% to 36,106.50, while the CNX Nifty was down by 33.55 points or 0.31% to 10,821.60.