Benchmarks to make gap-up opening of F&O expiry session

Indian markets ended range-bound session almost flat with negative bias on Wednesday as late hour sell-off mainly dragged the indices below their neutral lines amid US-China trade talks. Today, the markets are likely to make gap-up opening of F&O expiry session, mirroring firm global cues after the US Federal Reserve signaled a pause in interest rate hikes. Traders will be getting encouragement with SBI Research’s report that the government meeting the fiscal targets this year and for FY20, fiscal deficit is likely to be Rs 6.72 trillion or 3.2 percent of GDP, assuming a modest 11.7 percent of nominal GDP growth. It added that for FY19 the fiscal gap will be met at the budgeted 3.3 percent. There will be some support with Commerce Minister Suresh Prabhu’s statement that the government will release the new e-commerce policy soon which is awaiting approval from the Department of Industrial Policy and Promotion (DIPP). Traders may take  note of a report that the GST officials are working out mechanism to prompt taxmen to initiate profiteering complaints, which could be taken up for further investigation by the Directorate General of Anti-Profiteering. Currently, only consumers file complaints against businesses for not passing on the benefits of reduction of the rates of Goods and Services Tax (GST) on various products. Meanwhile, SEBI has proposed a new set of framework for REITs and InvITs in order to provide flexibility to the issuers in terms of fund raising and increasing the access of these investment vehicles to investors. There will be some buzz in the textiles sector stocks with India Ratings’ report that India's textiles sector may see higher growth following robust domestic demand and depreciating rupee value. It has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetisation and rising exports aided by a weak rupee. There will be some reaction in renewable energy sector stocks with ICRA’s report that renewable energy is set to witness 10,000 megawatt (Mw) in fresh capacity addition in FY20, aided by project awards from central agencies and state-owned distribution utilities. There will be some important earnings announcements too to keep the markets buzzing.

The US markets rose on Wednesday after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy. Asian markets were trading mostly in green in early trade on Thursday following overnight gains on Wall Street amid easing growth concerns.

Back home, key equity bourses settled Wednesday’s session almost flat with negative bias. Start of the trading session was cheerful, as the Reserve Bank of India (RBI) said that it will inject Rs 37,500 crore into the system through the purchase of government securities in February to increase liquidity. The RBI also said it has been monitoring the evolving liquidity conditions and durable liquidity requirements of the system. In early deals, traders were seen taking encouragement with Commerce and Industry Minister Suresh Prabhu’s statement that India is optimally leveraging digital technologies to offer various services for citizens and is poised to take full advantage of new generation of technological advancements. He said that digital technologies are advancing and becoming all pervasive. Some relief also came with credit rating agency, ICRA’s report stating that while the number of insolvency cases are expected to pile up over the next few quarters, timely conclusion of cases within the law mandated 180-270 days can free up as much as Rs 67,000 crore to the system. However, the markets soon turned volatile to end the lackluster day in negative terrain, as anxiety spread among the investors after S&P Global Ratings warned that corporate activities which are designed to support the Indian government's budgetary coffers -- such as share buyback -- by public sector undertakings (PSUs) are credit negative for such entities. Some concern also came with a report that the United States and China launch a critical round of trade talks amid deep differences over US demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 US tariff hike. Positive opening of European markets failed to give support to the Indian markets. The market participants paid no heed towards the annual index releasing 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. Finally, the BSE Sensex lost 1.25 points to 35,591.25, while the CNX Nifty was down by 0.40 points to 10,651.80.