Benchmarks to open slightly in green on Wednesday

Snapping five-day winning streak, Indian markets settled in red territory on Tuesday amid profit-booking and lackluster global sentiment following poor outlook on the global economy. Today, the markets are likely to make slightly positive start amid fall in oil prices. Traders will be getting encouragement with the Reserve Bank of India’s announcement of Rs 10,000 crore bond buyback on January 24, 2019, continuing with its commitment to provide adequate liquidity. The central bank had earlier committed to purchase government securities under its open market operations for an aggregate Rs 50,000 crore in January and has so far done Rs 30,000 crore. Some support will also come with former RBI governor Raghuram Rajan’s statement that India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries. Rajan said Indian economy would continue to grow while growth rate is slowing down in China. Traders may take note of the Employees' Provident Fund Organisation’s (EPFO) latest report showing that Employment generation in the formal sector increased by 48 per cent to touch a 15-month high of 7.32 lakh in November 2018 as compared to 4.93 lakh in the corresponding period in 2017. However, there may be some cautiousness following weak global cues amid uncertainty about global growth. Meanwhile, the SBI report said the government should opt for the unconditional cash transfer to farmers to alleviate agrarian distress rather than Universal Basic Income (UBI) scheme. There will be some buzz in the insurance industry related stocks with Moody’s Investors Service stating that India's insurance and reinsurance sectors will grow strongly driven by strong economic growth and evolving regulatory regime. It said robust GDP expansion, coupled with current low insurance penetration, should support double digit growth for the non-life sector over the next 3-4 years. There will be some reaction in steel sector stocks with Steel Minister Chaudhary Birender Singh’s statement that India is expected to edge past the US with regard to steel consumption this year. Also, there will be buzz in the power sector stocks with power minister RK Singh’s statement that the recommendations of a high-level empowered committee (HLEC) on stressed power assets will be placed before the Cabinet soon for approval.

The US markets settled lower on Tuesday as weak data out of China and lower global growth estimates from the International Monetary Fund renewed fears of the global economy slowing down. Asian markets were trading mostly lower in early deals on Wednesday on escalating signs of slowing global growth and concerns over a yet-unresolved Sino-US trade dispute.

Back home, key Indian equity markets suffered a massive bout of selling on Tuesday, with Sensex and Nifty ending lower by around 135 and 40 points, respectively. After a negative opening, the key indices traded in negative terrain throughout the session, with India Ratings’ report warning that with populist decisions like farm loan waivers and other financial support schemes likely to gain significance in the run-up to the forthcoming next general elections, aggregate fiscal deficit of the states is expected to reach 3.2 per cent in FY20. It expects the states’ revenue account on aggregate to clock a deficit of 0.5 per cent of Gross Domestic Product (GDP) in FY20 due to a higher growth in revenue spends than revenue receipt. Domestic sentiments also got hit with a private report stating that chief executive officers (CEOs) across the globe harbour a grim outlook towards 2019 and the economy with nearly 30 percent of them projecting a decline in global economic growth. This is surprising when seen against the record jump in optimism projected by CEOs just last year. Investors took note of a report that India has moved up one position to rank 80th on the global talent competitive index, but remains a laggard among the BRICS nations. Anxiety also remained among the investors, amid Crisil’s latest report that even as 12 large states grew faster than national GDP in FY18, the same has not translated into job creation, as GSDP expansion has come in from sectors which are less job-intensive. It said 11 states have recorded lower growth in employment-intensive sectors such as manufacturing, construction and trade, and hotels, transport and communication services, compared with the national rate. But, the markets managed to come off their intraday low points in last leg of the trade, supported by the International Monetary Fund’s (IMF) statement that India will further build its lead as the world’s fastest-growing major economy as it picks up pace next year while the global economy is forecast to slow. India’s GDP is forecast to expand 7.5% in FY20 and 7.7% in FY21, while China’s growth is seen at 6.2% in both years. Some relief also came after the Reserve Bank of India (RBI) proposed to relax norms for entry of new players in the retail payment systems with a view to give a boost to innovation and competition. The RBI has been issuing guidelines for various payment systems and grants authorisation to non-banks for setting up and operating payment systems. Finally, the BSE Sensex fell 134.32 points or 0.37% to 36,444.64, while the CNX Nifty was down by 39.10 points or 0.36% to 10,922.75.