Markets to make cautious start on penultimate session of F&O expiry

Indian markets made recovery in last leg of trade on the back of short-covering by traders but failed to hold head above water and ended lower for third straight session on Tuesday. Today, the markets are likely to make cautious start amid mixed global cues on US-China trade tiff. However, traders may take some support later in the day with Icra’s report that the number of insolvency cases is expected to pile up over the next few quarters, the timely conclusion of cases within the law-mandated 180-270 days can free up as much as Rs 67,000 crore to the system. Traders may also take note of the annual index released by an anti-graft watchdog that India has improved its ranking on a global corruption index in 2018, while its neighbour China lagged far behind. Besides, India Ratings has said income support as a core centrally sponsored scheme is a better option than debt waiver. Meanwhile, Commerce and Industry Minister Suresh Prabhu said that India is optimally leveraging technology to offer various services on digital platforms and is poised to take full advantage of new generation of technological advancements. There will be some reaction in banking sector stocks with SBI in its Ecowrap report stating that Public sector banks (PSBs) would require another Rs 50,000 crore fund infusion in 2019-20 to help enable credit growth of 11 per cent. There will be some buzz in the public sector undertakings (PSUs) stocks with S&P Global Ratings’ statement that the Centre’s bid to boost its non-debt capital receipts by pushing the cash-rich central PSUs to buy back their own shares has impacted the credit profile of these firms. It said corporate activities that are designed to support the government coffers by PSUs are ‘credit negative’ for such entities. There will be some reaction in auto ancillary stocks with report that to promote domestic assembling of electric vehicles, the government lowered customs duty on import of parts and components of such vehicles to 10 to 15 percent. Until now, vehicle parts and components imported for assembly in India attracted import duty of 15 to 30 percent. There will be lots of important earnings announcements too, to keep the markets in action.

The US markets ended mostly lower on Tuesday as investors sorted through a fresh batch of earnings reports and awaited clarity from the Federal Reserve on its monetary policy plans. Asian markets were trading mixed on Wednesday as the earnings season rolled on and investors awaited the Federal Reserve’s policy meeting.

Back home, Indian equity bourses carried on their weak run on Tuesday, with Sensex and Nifty closing the day below their crucial levels of 35,600 and 10,700, respectively. The markets made a cautious start of the day, tracking other weak Asian markets. Anxiety spread on the street, after the Income Tax Department launched searches at 74 places in Tamil Nadu in connection with a tax evasion probe against some real estate groups and a retail store chain in the state. Investors also took note of a report that the Income Tax Department has confiscated assets worth Rs 6,900 crore till now as part of its action under the anti-benami transactions law. Domestic sentiments remained lackluster throughout the day, even after Finance Minister Piyush Goyal urged public sector banks (PSBs) to step up lending to micro, small and medium enterprises (MSMEs), agriculture and housing sectors and also assured these lenders of all kinds of support. Goyal in its meeting with the heads of PSU banks discussed internal mechanism to resolve cases under the RBI guidelines and within the framework set in the bankruptcy court. However, key indices managed to come off their intraday low points in the last leg of the trade, taking support from the Reserve Bank of India’s (RBI) latest data report that foreign direct investment (FDI) during the previous fiscal grew 18 per cent to Rs 28.25 lakh crore. As per data, FDI increased by Rs 4,33,300 crore, including revaluation of past investments, during 2017-18 to reach Rs 28,24,600 crore in March 2018 at market value. The RBI said as many as 23,065 companies responded to the latest round of the census, of which, 20,732 firms had FDI or ODI in their balance sheet in March 2018. Some relief also came after RBI Governor Shaktikanta Das asked PSBs to extend credit while observing prudential norms without getting excessively conservative. He highlighted the importance of PSBs for the economy at all times and especially at the current juncture in helping meet broader economic goals. Finally, the BSE Sensex lost 64.20 points or 0.18% to 35,592.50, while the CNX Nifty was down by 9.35 points or 0.09% to 10,652.20.