Benchmarks likely to make slightly positive start of the new week

Indian markets ended lackluster session almost flat with positive bias on Friday as higher oil prices and a weakening rupee offset positive cues from global markets. Today, the start of the new week is likely to be slightly in green tracking positive global cues amid developments in the US-China trade relations. Traders will be getting some encouragement with Union Commerce and Civil Aviation Minister Suresh Prabhu’s statement that India has the potential to be a $5 trillion economy in the next 7-8 years. Prabhu said his department had prepared a road map to make this possible by focusing on manufacturing, service sector and agriculture. Traders may take note of central bank Governor Shaktikanta Das on Friday said the Reserve Bank of India (RBI) will make all efforts to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth. Also, there will be some support with a private report that India is likely to surpass the United Kingdom in the world’s largest economy rankings in 2019. The report projects real GDP growth of 1.6% for the UK, 1.7% for France and 7.6% for India in 2019. Besides, RBI’s latest data showed that the forex reserves continued its upward march and increased by $1.267 billion to $397.351 billion in the week to January 11, aided by a rise in core currency assets and value of gold. The overall kitty had swelled by $2.68 billion to $396.084 billion in the previous reporting week. Meanwhile, Exporters body FIEO has sought immediate intervention of the government and RBI to resolve issues related to payment mechanism for Iran and flow of credit to push shipments. However, there may be some cautiousness with Care Ratings’ report that the Centre is unlikely to meet its disinvestment target of Rs 80,000 crore this year, resulting in overshooting the fiscal deficit target. The report said owing to a shortfall in disinvestment realisations as well in indirect tax collections under the GST regime, the fiscal deficit will come in at 3.5% as against the targeted 3.3%. There will be some buzz in the banking sector stocks with RBI Governor Shaktikanta Das’ statement that efforts are being made to strengthen corporate governance in the public sector banks to effectively check incidence of financial frauds. There will be some reaction among the coal sector stocks with a report that coal imports in India saw a surge of 6.7% to 171.81 million tonne (MT) in the April-December period of the ongoing financial year. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets extended their gains for fourth session and settled higher on Friday as investors cheered potential progress in trade negotiations between China and the US. Asian markets were trading mostly in green on Monday as investors demonstrated continued confidence that trade tensions ultimately will subside and policy makers will refrain from growth-damaging monetary tightening.

Back home, the Indian equity benchmarks saw volatility on the last trading day of the week but managed to end in green terrain with minor gains. The markets made a slightly higher opening, buoyed by India Ratings and Research’s (Ind-Ra) latest report that India’s Gross Domestic Product (GDP) growth is likely to grow a tad higher at 7.5% in 2019-20 (FY20) on account of steady improvement in major sectors -- industry and services. Traders were seen reacting positively towards reports that India Inc has urged the Reserve Bank of India (RBI) to cut its benchmark interest rate and lower the cash reserve ratio (CRR) to boost growth. It suggested various measures to ease tight liquidity situation and reduce high cost of credit in the light of consistently falling inflation. But soon, the key indices turned volatile to swung between gains & losses, on the back of cautiousness on the street ahead of corporate earnings results. Traders took note of RBI official’s statement that with the country's GDP size increasing in quantitative terms, there could be need for more currency in the economy. However, in the last leg of the trade, the markets erased all of their losses to end flat with positive bias, tracking positive global markets. Domestic sentiments got relief came with a private report that eighteen micro finance non-banking financial companies (NBFC-MFIs) have pooled assets worth a combined Rs 835 crore for securitisation, to tide over a liquidity problem in the sector. Adding some comfort, Prime Minister Narendra Modi said that his government has helped create crores of employment opportunities across sectors in the past four-and-a-half years. Separately, Prime Minister also said that India is aiming at being in the list of top 50 countries in ease of doing business by next year. The market participants also took support with Agriculture Minister Radha Mohan Singh’s statement indicating announcement of major measures in the coming weeks to address farm distress across the country, a move that will come ahead of Lok Sabha elections. Finally, the BSE Sensex gained 12.53 points or 0.03% to 36,386.61, while the CNX Nifty was up by 1.75 points or 0.02% to 10,906.95.